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Guar outlook 2012

Since last October and starting 2012 guar prices have continued to rise at an extraordinary rate. CyberColloids has been involved with sourcing guar splits with prices at the end of December for immediate shipment were around $4.5/kg FOB. As of the 24th January this price is now up 87% to almost $8.5/kg for shipment in March.

With this type of price increases there is now a severe risk for food customers who have placed contracts at lower prices will not be met as their ‘allocation’ will to be ‘switched’ to the more lucrative oil customer.

Evidently some user companies have requested an investigation to be made but to whom and by whom??

There is one glimmer of hope. Normally guar is only planted once a year mostly in the non irrigated areas of India, around Rajastan with a smaller crop in the irrigated areas of Haryana. There are now reports of a second crop in Haryana being planned which could yield an extra 50-75kT coming on stream mid year with new capacity in place. What that will do to price is anyones guess.

IMR reports that by 2016 demand from the oil industry will be around 617kT per year, up117% from that which was supplied in 2011. This demand would also be slightly over 100% of planned new capacity resulting in the possibility of food and other non oil customers being squeezed out altogether.

Can more be grown? Will producers continue to invest in new capacity? Will substitutes be found ? Evidently there is another unexploited galactomannan, Sesbania Gum, which has come to CyberColloids notice. In a recent paper by Pollard, Carbohydrate Polymers 84 (2011) 550–559, reports that the Sesbania polysaccharide has a ‘molecular composition and chain-length distribution were found to be nearly identical, and thus galactomannans within this genus are presumed to share a common molecular structure (DSgal ≈0.7, Mw ≈2.5×106, PDI≈2). Solutions at c > c* exhibited shear-thinning behavior’.

What is unknown is how such a gum would perform in non food applications, as we don’t believe that it could be sold as guar, as well as whether a suitable supply chain could be set up to produce a powder. All very interesting but any advances will only come into being in the medium term.

All in all there is no doubt that prices will be remaining high for some time yet. The only comfort is that all food companies are faced with the same problem.

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