India guar gum exports up on industry demand

MUMBAI (Reuters) - India's guar gum exports for the year ended March 2008 are estimated to have risen about 6 percent on year to 200,000 tonnes on strong industrial demand, a top trade official said on Monday.

Industrial grade guar gum accounted for about 45 percent of the exports and food grade about 30 percent.

India is the largest producer and exporter of guar gum, accounting for about 80 percent of the world trade.

In July and August last year, 16 of the EU's 27 member states had toxin-related recalls of food products containing Indian guar gum.

The move hurt food grade gum exports to Europe, a major buyer, which fell 19 percent in April-Oct to 5.42 billion rupees.

"The European Union report did hurt the food grade exports to an extent, but now it's under control and picking up," Debjani Roy, executive director, Shellac & Forest Products Export Promotion Council (SHEFEXIL), told Reuters in an interview.

In the situation, major demand came from the U.S, which bought about 80,000 tonnes of the commodity, followed by China, which bought 40,000 tonnes. And new importers are emerging.

"Brazil is emerging as a major importer of industrial grade gum," Roy said.

"Demand from oil exploration industry helped the exports. We anticipate a 10 percent growth in exports in 2008/09 on account of demand from oil drilling industry."

Guar gum is used as a controlling agent in oil wells; it facilitates easy drilling and prevents fluid losses.

RUPEE PINCHES

"We had higher export growth targets but couldn't achieve because of the rupee's appreciation and lack of export incentives," Roy said. SHEFEXIL had targeted a 10-15 percent growth in 2007/08.

Exports in value terms stood at 11 billion rupees, down 2 percent, on an appreciating rupee. The Indian rupee appreciated 8.3 percent during the year to March 31, biting a chunk out of export earnings.

On production front things have been better on account availability of higher quality seeds, Roy said.

India's guar output was estimated at 850,000 tonnes in 2007/08, up from about 650,000 tonnes a year earlier, she said.

"The futures trade in guar seed and gum has been helpful in actual price discovery in 2007/08."

Guar seed is among the top three traded agricultural commodity on Indian bourses.