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 represents 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 w ent 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.
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