Guar Market Report as on June 22, 2005

The Indian monsoon finally gained momentum and good rains were received during the weekend, over Konkan and Goa, south central Maharashtra, north interior Karnataka, coastal Andhra Pradesh and West Bengal.

Latest data show an increase in the southwest surface winds, which are essential in generating monsoon rainfall. This increase in speed is likely to help induce a more normal expansion of seasonal rainfall into India over the next week to ten days. As far as the guar growing states are concerned, computer forecast models suggest that monsoon may progress further and cover south Gujarat region with isolated rainfall over Saurashtra and Kutch. Rajasthan is likely to experience mainly dry weather over the next 5 days.

The Guar market has been unstable since the beginning of 2005 with significant rise in the price in the month of April. Guar seeds and splits futures are being actively traded on two commodity exchanges in India NCDEX and MCX. Besides the annual monsoons, the level of trading activity in guar futures also has a direct bearing on the spot prices.

Good rains over the weekend have resulted in the splits price going down by around US$ 45 PMT to US$ 1000 PMT, but doubts regarding the progress of rains have prevented the prices from falling further. We feel that with timely progress of the monsoon towards Gujarat and Rajasthan, the prices may go down by another US$ 30 PMT.

The Indian Meteorlogical Department still maintains that the monsoon is delayed by a week and will be 98% normal during the season, whereas Centre for Mathematical Modelling and Computer Simulation (CMMACS) has said that June will see 33% and July will see 12% deficient rain and August will see 14% above normal rainfall.

Considering the various factors at hand, we believe buyers should not place orders right away. They should closely follow the monsoon over the next 2 to 3 weeks and take purchase decisions during that period.