RANTEC GUAR REPORT, December 22, 2011

Guar gum trading continues to set new highs each day at the NCDEX, India’s trading exchange.  Increases of $0.10/lb each day are the norm all the while demand and orders keep coming from all sectors, food, industrial and mostly oil/gas.  Speculators are very active, feeling that prices will increase only further in March as the new crop arrivals stop coming to the market.  Evidently, some of these speculators have very deep pockets reaping the rewards of the rising market in 2011.

The guar gum crop is now rumored to be less than the initial estimates of 10-14 million bags.  Some feel the crop is more like 8-10 million bags.  Our estimates put world wide demand at 10-11 million bags.  We continue to gather information on the crop size to determine if in fact these are rumors by some to drive the market up for future profit taking.  Whether or not the lower crop estimates are accurate, the effect is now and happening.  Buyers have panicked, a somewhat normal reaction to rising prices, and flooded manufacturers with new orders.

On the positive side, today is the first we hear of a possible market correction or the upside is weakening.  Some in India are calling for investigations into NCDEX  trading and possible illegal activities.