Newsletter

In early 2016 most producers of psyllium products in India predicted lower prices for the year.

However, prices went up step by step due to crop yield of only approx. 70 %, compared to the previous year.

In addition, there is an increasing demand from the food industry and the pharmaceutical industry. Psyllium products are getting more attractive for the end consumer, too. The trend towards gluten-free food continues and Psyllium has become an interesting raw material for many fields of application.

The sowing for the harvest next year (March / April) has already taken place between October and November and has now been completed. A forecast about crop quantities, expected quality and price indication cannot be made before spring 2017. Until then, we expect stable prices at the current high level. Unfortunately, the strong dollar is not helping in lowering prices.

Based on the present market situation, we recommend coverage for the first quarter of 2017.

Alexei Justiz
19.12.2016

We have just returned from a trip to India a few days ago.
After the harvest of guar finished, we were able to get an overview of the current situation.

Our journey was affected by the completely surprising and astonishing action issued by the Indian government to invalidate the two major Rupee notes (500 and 1.000 Rs.) which represent approx. 85 % of notes circulating in the market. Thus, 85% of Indian cash became invalid. It is assumed that approx. 50 % of cash in India is black money. With this overnight action black money was taken from the market immediately. The damage for black money holders is tremendous and is worth billions.

What does this decision have to do with guar gum?
Most smaller farmers do not have a bank account and handle all business in cash. As cash is hardly available these days, the farmers could not bring any raw material to the market.  Logically, this led to a shortage of seeds and prices went up. Before this unpredictable action of the Indian government guar prices began to fall easily. Now, they have started to increase again.

The exchange action with the new Rupee notes is in full swing, however, it is not expected to be resolved shortly. It is assumed to take months until sufficient cash is available again.

Indians are now lining up in front of all banks for hours to get the money changed into new notes. The banks require information where the money comes from to identify “legal” money from black money.

Due to this current situation and increasing demand for guar gum for the American fracking market (Trump effect), a significant drop in prices cannot be expected.

In addition, we just learned that the huge stocks of guar gum in Houston / Texas were sold to the oil industry within a few days.
The stocks will be built up again shortly which will have an effect on prices.

However, current prices are interesting and demand for the next months should be covered.

The 2016 harvest is over and ended in a surprise.

Several weeks before the harvest there were very positive signs and reports from the Mediterranean cultivation countries. The yield was forecasted to be very positive and a good quality crop was also predicted.

In fact, the harvested volume fell shorter than expected. The quality is rated as average.

Harvested crop in 2016 (tons):

The world market demand is about 34,000 t p.a.
Carry over from last year's harvest is minimal.

Before the harvest started we assumed prices will drop based on information received at that time. However, it turned into the opposite direction.
Kibblers in the main countries Morocco and Spain are still supplying the markets with limited quantities in the hope to drive prices up.
Producers of locust bean gum have sometimes difficulties getting sufficient raw material.

We, therefore expect prices to remain stable for the coming months at current higher level.

Dietmar Neupert
07.12.2016