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Wednesday, July 16, 2014

Sesame Seed Monsoon/New Crop July 16th 2014


Hi Everyone,

Been a long time since I updated the post , actually there was nothing much to write anyways. Everyone had their own idea's of the Market and without numbers in hand it made little sense to counter the predictions/Guesstimates and view of the market.

Lets first look at some of the things that have happened in the past few months.

1:- Summer crop in Gujrat came out and although everyone put out numbers in excess of 150,000 MT , the official survey reports pegged it at around 115,000 MT.

2:-  The hulling industry saw the birth of another quality this year from Double Skin Bengal Brown Sesame seed. I had my apprihensions about the quality and I continue to do so. Thankfully people are now atleast offering it a different grade altogether so that buyer's now have a choice weather to buy cheap chemical laden product or opt for the Premium Product. The price difference is almost $200-$300 PMT so you need to be careful what you buy and from whom you buy.

If you buy the cheaper grade at cheaper quality knowingly its perfectly fine and a personal decision but incase someone sends you the cheaper quality at a slightly discounted price compared to the Premium it means instead of saving $100 PMT you probably lost $200 and now you work with the risk of selling substandard quality to your premium grade buyer's.

The Brown Sesame Grade is here to stay so everyone needs to be extra careful from now on.

3:- The stock levels as rightly predicted have touched a all time low , Stocks in the states of UP, MP and Rajasthan have almost finished. Atleast for UP and MP I can predict with utmost confidence that they might not have more than 5000 MT put together and even this is a exaggerated number.
I wouldn't be wrong in saying that the only reason buyer's have been able to buy from India and India has been able to export Sesame is because of Gujrat Summer crop from Mid May onwards.


Now to some numbers

1:- Gujarat Summer Crop :-
Arrivals started around 15th May,Peak arrivals around 25th May and Dipped again around 25th June. Peak Arrivals average around 25,000 Bags/Day or about 2000 MT/Day.
Slow Arrival Average around   8,000 Bags/Day or about   600 MT/Day
      Peak Arrival Days :- 30 , Slow Arrival Days :- 30

Total Quantity = (30 X 2000MT) + (30 X 600MT) = 78,000 MT. This number might still be off by 10% so lets assume we've had a crop close to 90,000. Even though I never put a number our regular clients will know that we never estimated the crop to be above 100,000 Mt .

Some people might argue there were days with 35,000 Bags/Day arrival as well , so to factor in the odd days I have taken a average without considering the holidays or carry over sales of the day.

2:- Indian Sesame Seed Export Import Data for the past 2 years
Export
S.No.HSCodeCommodityUnit2012-20132013-2014%Growth
1.120740SEASAMUM SEEDS MT299,482.29257,443.09-14.04
S.No.HSCodeCommodityUnit2010-20112011-2012%Growth
2 .120740SEASAMUM SEEDS  MT398,441.17389,154.01-2.33
Import
S.No.HSCodeCommodityUnit2012-20132013-2014%Growth
1.120740SEASAMUM SEEDS MT38,050.4572,928.0991.66    
S.No.HSCodeCommodityUnit2010-20112011-2012%Growth
2120740SEASAMUM SEEDS MT8,727.92609.28-93.02

Interesting number's these. You will notice in the past 4 years the Exports from India have dipped by almost 140,000 MT but the Imports have risen by almost 70,000 MT.

India cannot import Sesame for domestic consumption so all that we are importing we are re-exporting.
Its a similar pattern to what China had till it became a net Importer. The domestic consumption in India is rising and the buyer's here are willing to pay a better price as well with less headache and faster payment terms. The African markets have opened up for everyone in the trade and India I believe is one of the biggest buyer from Africa now , weather they import the seeds into India or get them exported directly to various destinations is another story.


Current Situation and Future Predictions :-

1 :- Anyone thinking that the stockiest in India are sitting on huge loads of stocks in their warehouses is in for a big shock in the coming months. The stock situation is at a all time low in every sesame producing area and whatever little there is left should only be enough for India to sustain its export demand for the next 3 month until the new crop arrives.

2:- The monsoon is really weak in India and with almost 40% less rainfall the situation looks unlikely that it will improve. The late rains means that sowing in most areas has not even started now.
Going by the data available online

 "In oilseeds in particular, there has been 83 per cent drop as of last week July vis-a-vis July last year in terms of the area under sowing. "

"Sowing of most kharif crops barring paddy is significantly lower than the corresponding area last year. According to agriculture ministry data, a total of 25.6 million hectare area has been down as on July 12, half of the corresponding area of 51.76 million hectare sown in the corresponding period last year. Most affected is the sowing of crops like pulses, coarse cereals, oilseeds and cotton"

 "As on July 15, cotton sowing is done on 10.19 lakh hectares against normal of 27.17 lakh hectares, while groundnut sowing is 5.41 lakh hectares against normal 14.39 lakh hectares in the state. Total area under cultivation in the state is 11.25 lakh hectares as against the normal 26 lakh hectares."

"It would be a blind bet for the cash crops because rains are uncertain and the crop may fail. In this situation at least the farmers have to save their cattle by making adequate fodder available.The present rainfall is insufficient for sowing of cash crops because it would require more moisture in the soil. But with such rains, fodder is an option for farmers to survive their cattle"

Even if we assume that these estimates are wrong we can safely say that the sowing will be short and even if the rains come today and sowing starts tomm , which i don't think will happen anyways looking at the rainfall situation the sowing area is unlikely to be anywhere near what it was in the previous years. Even if the sowing finish by End July , the new crop will not be available before November now and that means for the next 3 months India will absolutely finish every last kilo of Sesame stock and might go into African markets aggressively to shop around , taking the global prices higher and higher till they can be cooled down by the new crop.

3:- The new crop predictions should start as usual in September-Early October and any bad news can create further panic , we also have to keep in mind that even that little new crop will be on the mercy of the rains , we have seen in the past few years what damage the last few weeks of rains can do to sesame seed crops.

4:- The festival season and Winter demand for the domestic markets in India should also start around Mid October and with no new crop in sight the old stocks will quickly be diverted to the domestic market where they fetch a better price. 

5:- I am not implying in anyway that the buyers need to stock their warehouses today in anticipation of price rise , there still are many factors which can cool down price

a:- Good crop in China and Myanmar , this will divert all the Chinese and to an extent the South Asian 
     Oil based demand.
b:- Drop in demand , again I say demand and not consumption. If on the shelf it will sell.
c:- A huge crop in India in a range of 250,000 -300,000 Mt.
d:- A normal to huge crop in Africa
e:- Currency factor is always there

Looking at all the factors above we believe there might be another bullish year ahead , atleast till December when African markets will once again determine the fate of prices for the next few months.
However with global prices available to everyone on real time basis atleast "WE" would not be naive enough to think that Africans would sell their cargo at throw away prices when they know for sure that no one else can fill in the global supply gap. With carry over stocks worldwide at all time low chances are we would continue to move hand to mouth basis for the next season as well.

Looking at the global scenario my suggestion once again to the buyer's who like to do business on a long term basis is to get into collaborations with actual Manufacturer Exporters rather than relying on fly by the night new suppliers and brokers. You might get lucky with small trader's once or twice but for a larger picture you do not even realize that slowly you are getting sidelined in the business and someone else is taking up that space. The only way to move forward in this global economy is to have a stable and reliable supplier base.

Switching to inferior quality in tough times might look like the best option initially but by the time the world spins around again you would find yourself on the wrong planet altogether.

Tough choice but thats what life is all about.





Tuesday, March 11, 2014

Sesame Seed Gujrat Summer Crop Prediction


Hi Everyone,

Since our last report in Jan the markets have been more or less rangebound as we thought they would.

Nothing much happening in the market except the gossips and predictions of a super Summer Crop in Gujrat . It seems like everyone expects the seeds to pour out of the farms onto the streets and a total crash in prices . We'll to be frank we don't really see that happening.

Lets look at a few reasons why we think so.

1:- The stocks in India are at really really low levels , its a fact I doubt anyone would deny now.

2:- Stocks at destinations are at a hand to mouth situation as well , I doubt there are buyers sitting on huge unsold stocks anywhere in the world.

3:- African cargo is practically over and they will not harvest till Early November in a big way.

4:- A new crop or a big new crop is not a unknown phenomenon . We have a new crop every year in every sesame growing region. Its much bigger in size than what we expect the summer crop to be and still prices do not fall let alone crash every time. Ofcourse a  new crop can start with a correction of 10-15% but how long that correction stays depends on so many factors which need to be looked at.

5:- With predictions numbers of 100,000-150,000 and even 200,000 coming out for summer crop I think most people have now forgotten what the average summer crop size actually is. So now even if we have a crop of say 80,000 MT everyone in the market will say its a small crop because the comparison parameters have been set to artificially high levels.

6:- While I was in Gulfood talking to a few friends everyone there predicted a super crop for chickpeas as well and within 3 weeks time the rains have practically turned the tables. Didn't the same happen to the sesame crop's in India over the past few seasons.

7:- Everyone says farmers would grow more sesame because the prices are high , but fail to acknowledge the fact that sesame is a low yield crop as well. So a farmer growing sesame today doesn't really make a killing compared to the other crops he can do as well. However going by the same logic the question remains that will the farmer who has seen his crops getting washed out for the past 2 seasons and lived in misery will dare to do sesame seed again if the Indian government predicts another good monsoon.The fact is that a good monsoon in India means that you can have a good crop of practically any commodity except Sesame.

Here are a few articles for you to go through to understand that with the unpredictable world weather how difficult it really is to predict a good or bad crop even after its been sown , let alone predicting a crop size even before the sowing started. Still have a good 2 months before new summer crop arrives and will be interesting to see how many Astrologer's who predicted a bumper crop revise their estimates in the meantime and get their clients into deeper troubles.

http://timesofindia.indiatimes.com/city/rajkot/No-respite-from-rain-hailstorm-in-Saurashtra/articleshow/31773484.cms

http://timesofindia.indiatimes.com/business/india-business/Fears-of-El-Nino-on-rise-may-spell-woes-for-the-economy/articleshow/31824485.cms

http://www.hindustantimes.com/india-news/storms-batter-half-of-india-damage-farms-and-crops/article1-1193410.aspx

The USD has started playing games as well just like we expected it to in Election Year. The USD has moved to 60.80 levels from nearly 63 levels a few months ago which is like a 3-4% appritiation.







Monday, January 20, 2014

Market Report Sesame Seed 20th Jan 2014



Hello Everyone,

Hope everyone had a great start to the New Year and we wish everyone a lot of Happiness , Joy and Prosperity.

Sesame Seed market over the past few months since our last report has moved along just as we predicted. The Hulled Sesame Seed Price jumped to an all time high of around $3200-3250 FOB levels and have since then settled down at around $2850-$2900 FOB levels.

What has indeed happened is the arrival of sub-standard qualities in the market which are trading at much lower levels but frankly speaking I personally wouldn't recommend anyone to eat that. In my 14 yrs in business its very rare that I have ever tried to ridicule or snub a competitor , what others do is none of my concern but when it comes to Sesame Seed laced with Chemical's , bleach and various whitening agents I think its my duty to make people at least aware about it. I never understood this fascination of pearly white color in the seeds anyways.

The cheaper variety or "Hulled Sesame Seed from Brown" as they call it, is being made from crushing grade Brown sesame ,just the brown/black/Red etc mix kinds was still acceptable but this year they are trying to hull the double skinned sesame , mainly found in West Bengal region of India, the worse kinds that is available, even the oil made from these seeds is considered lower grade and for direct consumption its almost as good as slow poison. As of now the food authorities around the world are not checking for chemical adulteration in Hulled Sesame but I am sure some day they will and then a lot of people will loose a lot of money in claims and God forbid will land up in jails for mis-declarations.

You can ask your respective suppliers more about it , just ask which raw material is being used for the Hulled that they are supplying to you and for once just ask them if its chemical and bleach free,  you will be surprised how quickly the price offered will change. Its a dirty game being played in India so just be careful. I can understand if the price difference is 50-60$ PMT for a Hulled Sesame Quality , but a difference of $200-$300 raises suspicion. Something has to be wrong somewhere.

Moving onto better things , the Sesame Market overall.

Current Situation :-


1:- The markets are almost stable on a day to day basis over the past few weeks now. The arrivals have virtually stopped and the demand remains sluggish with mostly spot business being done.

2:- The stocks are definitely not huge , contrary to what many people think that there really is a lot of stocks hidden somewhere and one day the flood gates will open and all the sellers will come out with truck loads and markets will crash 20-30% overnight. I really doubt that. Being a manufacturer I have never really seen a situation as we see now. To buy 100 Mt a day in Jan is a big deal today , whereas in past we could collect a 1000 mt over the phone.

3:- The Korean's tried to play smart and announced a tender excluding their traditional suppliers ie. India, Pakistan , Sudan and Ethiopia. They thought the smaller countries should be brought into the picture to expand the supplier base , it did work but surely not the way they probably thought it would, the prices they got around $2550-$2600 was not really a huge bargain.

4:- Africa was the only reason we believed that could have brought the prices down, it did to a certain extent but once again our predictions from the past held true. Sesame is no longer a sub $2000 commodity. Unless something really drastic happens i doubt the Natural 99/1 grade can trade below $2000 levels this season i.e till next new crop in Oct 2014.

5:- Talking about the dip in demand and exports , a lot you will be surprised to know that the export numbers from India from Oct- Dec are only marginally down. If I have the correct numbers the total export from India for Oct-Dec stands at around 53,000 MT . That is rougly about 18,000 Mt per month.

6:- The sudden correction in prices have forced virtually everyone to get rid of the excess stocks. The exporters , bigger stockiest have all gone into profit booking mode since mid Dec and I believe by mid of Feb we should once again see hand to mouth buying from everyone. Even with so little buying by exporters and bigger stockiest the prices at farm/market levels remain firm and high showing that there really is lack of supply and bullish under current.

7:- People talked about heavy imports from Africa into India , but fail to realize that unlike last year the average Import prices are around 2000-2100 $ PMT . Average cost to bring the imported cargo to the factory is around $100 PMT . So with a landed price of  $2100 PMT and taking a good yield of say 80% we get $2625 just the cost of seeds. You need to add the manufacturing cost + packing + export charges + interest cost etc, all of which will cost nothing less than $200 PMT. So the mean average that we predicted in the start of the season around 2800-2850 stands justified.

Unless someone can point out where the raw material is cheaper than $2000 PMT on a consistent supply basis  , I see no reason for a huge slump in prices in India.


What can happen over the next few months :-


1:-  News of smaller new crops ( Mid Season) are coming in from Gujrat. I think these are the one's where the farmers did resowing after the late damages. I would put these to be in the range of around 2000Mt to 3000 MT on time to time basis. People say these could pull the markets down but I believe they are more likely to keep the market steady.

2:- Gujrat summer crop. Phewww  some people are already talking about summer crop being huge , bumper , ultra super in the range of  100,000 Mt.  Well all I can say to such rumors is good luck Mr Nostradamus . Last time Gujrat produced a 100,000 Mt was a decade ago and even that was a regular crop. The sowing has not started yet , we don't know what the weather is likely to be in the coming months so predicting a crop size just on the basis of high prices right now is like predicting floods after a thunderstorm. Yes it might rain cats and dogs , but then maybe it just drizzles , who knows :). The crop comes out around Mid May-June so we still have time , the sowing will start end Feb-Early march and hopefully we should start getting some size estimates by Mid April.

3:- Korean Tenders will continue to come in from time to time and will keep determining the bench mark prices across the world. Tenders are likely to be smaller in lot size as we have noticed from the past few tenders but i believe the overall quantity on a yearly basis should be same.

4:- If the prices from Africa and India remain stable i foresee a renewed demand coming back as i have a feeling the buyer's have almost got used to or comfortable at current levels and there is no need to panic anymore.

No big crops expected globally for the next 6-7 months , the next big crop will be China in September and till then it will be bits and pieces crops in various african destinations which certains cannot cater to every market segment on a regular basis.

Overall our predictions for the next few months atleast till the next summer crop arrives is that market would remain firm and rangebound. At higher levels the buyer's will slow down and at lower levels there will not be enough sellers. So once again for Hulled a Range for $2800-$2900 remains a good and safe bet to be active in the market.

We also need to watch the US$ carefully , thankfully for the past 3 months it has been stable and moving in the range of 2-3% both ways but with Elections in India just around the corner ( Expected to happen in April-May) the economic situation could turn either ways and from the little information that we've got it can get very volatile during that period.

For people who were worried about the consumption drop in Sesame seed , I found a few interesting articles on the Internet about the growth on hummus ( its 50% Sesame Paste i.e Tahina) . 

http://www.theguardian.com/lifeandstyle/shortcuts/2013/aug/07/british-love-affair-with-hummus
http://www.huffingtonpost.com/2013/05/02/hummus-is-conquering-amer_n_3202411.html
http://en.wikipedia.org/wiki/Halva








Friday, November 8, 2013

Sesame Seed Market Report 8th Nov 2013


Hello Everyone,

So finally the wolf has arrived. All these years we've had the same stories from India about short crop , no raw material , no carry over stocks but this year it looks like the story is finally true.

Ohh...My God , Are you guys Crazy...etc etc , some of the very common phrases we have been hearing everytime over the past few weeks and to a certain extent I agree with the clients that Indians have indeed gone crazy. Yes the markets are short but the kind of daily/weekly movement we have seen in the recent past are just plain crazy.

Like I have been saying for the last few months that the market remains bullish despite the prices which fell periodically from time to time , the reason being more currency driven rather than an excess supply or a lack of demand.

Let us look what happened first :-


1:- We all knew that India had a good monsoon but we failed to recognize the fact that a good monsoon   does not always mean a good crop specially when the crop is sesame . I had specifically mentioned this point in my september report before the crop even arrived.

2:- Carry over stocks were depleting quickly and we thought we can live without them as soon as the new crop would come in.

3:- The currency movements were so sharp in the past few months that it made the markets almost directionless .Everyone was playing more with the currency rather than the actual commodity prices.

Current Situation :-


1:- Despite the initial losses due to heavy rains in India and the losses in the northern states of UP/MP the growth figures coming from Rajastan and Gujrat made everyone believe that the overall numbers of total crop would be more or less same as last year , however the late rains changed all that.

2:- The numbers put forward by various agencies/associations/trade estimates say the total crop is around 200,000 - 220,000 Mt. I would say these numbers are more or less correct looking at the average arrivals in the local markets over the past 30 days.

3:- I have no doubts that the export numbers from India will fall dramatically this year however from now until October 2014 the majority of global Hulled Sesame demand will still have to catered by India which means we will still easily export about 200,000 MT in the coming 10 months.

4:- Korean Tenders have shown an affinity towards the Indian suppliers and even the last tender was a testimonial of the fact that a major share of the Korean Tender will still be catered by India despite the high prices here. In a previous report I have explained how the complications with documents , the finances involved , the complicated Bid bonds etc ,the consistency in Quality and transit/delivery period all put together give an advantage to India for the Tenders.

5:- Last year we had carry over stocks at the start of the season , Indian's entered African market early and got some really really nice bargains for Importing the sesame into india which helped keep the market under control , this year however the Africans are in no mood to sell cheap to India. With prices already very high the risk factor has gone up so much that the handful of people who really do Import and reexport from India are also in a wait zone.

6:- The supply continues to remain weak  , the quality coming into the markets is 90% rain damage which means although it can be used for hulling the yields will be much lower compared to previous years which would mean higher pricing for Hulled. Sometimes for the factories it takes a little longer to realize the losses/cost increase due to yields and lower sales but I am sure eventually everyone will realize these finer points and costings for hulling units will have to be revised.

7:- The 99/1 grade is in very very short supply , the arrival overall are not even 100 mt /day for good quality which means that the prices for good quality Natural are almost at par with those of low quality hulled.

8:- At the moment there are only 3 kinds of buyers in the market
     a:- Exporters who sold forward and are short.

     b:- Buyer's who sold forward and did not cover.

     c:- Domestic demand which despite high prices is very strong atleast till dec.

    So even though a lot of buyers who say they have enough in their books and are well covered for the next few months  have not been covering more at higher levels , I am afraid suddenly everyone will realize their warehouses are empty and will jump back into the market at high levels asking for spot shipments creating a bigger ripple than there already is.

What can happen over the next few months :-


1:- Diwali festival is over , everyone in India waiting in anticipation that the arrivals will increase after diwali and a correction will happen. I have a feeling it might be correct, however we have time and again told our buyer that the window will be very small . Anyone waiting to catch the bottom might just miss the train altogether.

2:- If the arrivals do pick up we might see a correction of about 5-6 % , I am not expecting a big fall right away as the supply chain is still empty. A supply based bullishness can only be countered by excess supply and unfortunately we do not see any big supplies coming in and pulling the markets down.

3:- If the arrivals do not pick up everyone should be ready to pay a further premium of about 10% . We are already at all time high levels in terms on pricing in Indian rupee but there is always scope of some further upward movement.

4:- I remember a few yrs ago when Hulled Sesame crossed Rs 100 everyone said its just not sustainable and prices will crash , I explained the phenomenon in a previous report about new market benchmarks which are bound to happen every few yrs , I guess the next target would be Rs 200 , I doubt that atleast for this year it will be breached or can be sustained even if we do manage to touch it but I am sure that the current prices are fair  enough to be workable over the new few months.

5:- Africa as we all know holds the key to the markets , if the big boys there start manipulating the markets , which is very much possible looking at the global situation right now we are in for a tough year ahead.

6: -The news from Africa is not very promising either , none of the destinations are reported to have a bumper crop , at least not to the extent that they can cover the losses in number's we've had in India and China. BTW China crop was reported short as well and by estimates is only around 250,000 Mt.

Ofcourse the demand will fall this year and maybe to a certain extent some institutional buying from big bakers and confectionary makers will be less. However like in the past we still firmly believe that price is not a deterrent atleast for food products. A company may think that since their sales are down people are eating less , the fact in most case is just that one of your competitor is now cheaper or has ready cargo to offer and your buyer has merely shifted their demand to someone else to average out their costs and to sustain their demands because you didn't have enough to offer.

Some of my friends tell me..Ahh you can live without sesame , who's gonna pay such high prices.
But I tell them we can live without a lot of things we don't really need  yet people pay loads of money to eat them.

I do believe a good chunk of sesame application will be shifted towards other seeds but as the wheels turn everyone will notice that the retailers over a period of time have revised their prices and when prices of sesame do fall these people will make a killer profits as retail prices hardly ever get revised downwards and the one's who sat back will regret not being among them.But thats for long term , just a thought :)

I've heard numerous arguments of Africa emerging as a competitor and taking over the market share of India. The reports are absolutely 100% correct , did'nt India do the same taking over the market share of South America and china. The fact is we dont have enough seeds in India so naturally we are more expensive than Africa is at the moment . Africa also has the advantage of heavy export subsidies , currency valuations against USD and duty benefits in China but all these factors put together do not make a stable and a long term growth story. Its all about which country has a better and bigger crop , so atleast for the next few years the global markets cannot ignore the India story. Once India gets back its big crop that would be the time for a fair comparison.

As always our suggestions this year would be

1:- Stick to your reliable suppliers. A regular and old supplier is more likely to help you make a good average over long term rather than any flash supplier who is offering 4-5% cheaper right now.
I would not  suggest gambling away $60,000 for a $1000-1500 saving on a container.

2:- Stick to Quality , in short term switching to cheaper grade of sesame might look like a good decision but in longer run you risk loosing your potential clients when problems start and you unknowingly enter into a price war market where the competition is that much tougher. If you loose a business because a client wanted lower quality because it works for him there is a chance he will come back to you when he has problems or when he wants to move up in terms of quality segment but when a client moves away because he's looking for the cheapest price of the lowest quality where do you go.

Everyone in commodity market knows the china story , they captured every segment of business with cheaper prices but the party didn't last long. Would you today buy a cheap chinese product or a slightly expensive one made elsewhere ? BTW both sell , its just a matter of prospective.

3:- Like always please do not be tempted to catch the bottom , the best way forward is working on a average and atleast for hulled I would say an average price of USD 2800-2850 over the next few months should be a good buy this time. You might not get the volumes every-time so its important to be active in the markets at all levels and keep shopping/selling at all levels.

Sesame is no longer a cheap commodity and it sure is a very volatile one , in the next few years the competition is bound to get smaller because the smaller players will be pushed aside as the profit margins will be far less than the proportionate prices of investments and the risks involved , the one's who will survive will be the one's who stuck to the basics of business.
Right Quality - Right Price.

Once again we thank you for all the support and look forward to you comments.

KEEPING IT REAL - KEEPING IT SIMPLE













Monday, September 30, 2013

Sesame Seed Market Report September 30th 2013


Hello Everyone,

Time for another New season. Buyer's are ready...seller's are ready and all we need is Sesame seed.

I am sure by now everyone has the reports from India , the enthu cutlets , Eager beaver's or plain simple aggressive players as we say must have been feeding everyone with day to day updates. Monsoon came in early , but like we said in the last reports the rains were far too much for a good sesame crop.

Ofcourse there are areas still which look really promising but overall numbers we believe should not be more than last year. The late rains in Gujarat and Rajasthan have further messed up the sentiments and only when the actual new crop comes in the market and the volumes will start to emerge will things cool down or flare up further if the numbers do not show in terms of arrival.

I'll just sum up my views for the current crops and try to look at the path forward this year. As posted in our last report in July we discussed some number's looking at the total exports and decline in volumes in India.

Last year despite a Bad crop we had carry over stocks and at the start of the African crop there was a really good window of buying at attractive levels which helped India sustain its Exports. I doubt that the same situation will be repeated this year.  The gap in Production Vs Exports in the last few years has virtually wiped off all the carry forward stocks this year.We could see a further dip in Exports from India this year.

We predicted in Oct last year that Sesame ( Hulled ) was no longer a sub $2000 commodity and have been bang on with that. So when we talk about prices moving this season we should forget what levels we had earlier , the new low benchmark is now $2000 and the high being about $2700 last year  ,we have a avg mean price of around $2300-2400 so the price volatility this year should be in the range of  +/- 30% from the mean average.

 The $/Rupee will be important to watch as its moving up/down by about 15-20% on a yearly average as well.

The domestic demand in India should also pick up by end of October as the festive reason and winters set in . Stockiest everyone believes will not enter into the market at high levels and that everyone would try to move hand to mouth.  Once again I doubt that , high level is just a number....when prices were @ $1000 the stockiest aimed at $1200 and now that they are $2000 they will aim @ $2200 . So its a phenomenon that everyone in business is already aware of , yes stocking will happen , yes speculation will continue , yes prices will rise and fall and yes people will still be eating Sesame @ $3000 .

Due to high prices the volatility index has gone up tremendously in the past few years , the up/Down's are no more for a few $ here and there...we now see price changing by $50-100 in a matter of few days so its even more difficult to predict the bottoms and highs. My suggestion as always would be not to wait to catch the market at the bottom but to be active in the market all the time and work on averages.

A reliable supplier will probably feed you at all levels and minimize all risks for himself and for you while the speculator will probably make loads of money selling to his buyer at the peak or lose a lot having committed at the bottom. Either case Bad Business I would say. With 2 FCL's now costing almost a $100,000 it needs a careful understanding and long term planning with their trusted suppliers  to sustain in this commodity for long term.

The actual picture should be clear in a few weeks time and by the time Anuga , Germany is over I believe the market will finally have a direction.

                                       We cordially invite you at our Booth no. G-031, Hall No. 11.3 in the India Pavilion.







Tuesday, July 30, 2013

Sesame Seed Market Report July 30th 2013


Hello Everyone,

Time again for the sowing season in India and for bulls/bears to come out with their own adventurous stories.

Sesame Market has been lackluster over the past few months with limited demand and slow international movement. The Ramadan demand did not create any ripples in the market as expected and the very strong $ has kept the prices low in international terms despite stable and high prices in local indian currency.

As we all know India imported huge quantities of sesame seed from Africa this year at the start of the season and that helped sustain the demand of factories here for the full season. The domestic crop  is more or less exhausted and with good 2-3 months to go before the real new crop actually arrives in the market I believe we will most likely finish everything even if things move at snail's pace.

1:- Why are the prices falling :-
      Everyone keeps asking the same question now, why are the prices falling when stocks are low ?

The first reason ofcourse if the USD which has fallen over 10% over the past few months , in commodity terms thats like a discount of USD 200-250 /PMT despite prices being same in domestic terms in India.

The second reason is slow buying from customers , I think with high levels very few take risk and have decided to go back to back on their purchase. Like i said before some people indicate that the consumption has dropped , again I never agreed with that fact. It's probably that people have low inventory rather than anything else . The overall numbers however tell a different story.

Export of Sesame Seed from India

                                    April 2012/March 2013                 April2011/March2012
       
Total (Qty/Mt)            299,517.50                                      389,153.50                      Less 89,636

Major Deviation country wise :-

Taiwan                         14970.00                                        24467.00                   (- 9497 )
China                             2807.00                                        11389.00                    (- 8582 )
Egypt                             8298.00                                        20402.00                     (-12104)
Turkey                         12610.00                                       16223.00                     (-3613)
UAE                              3730.00                                         6391.00                      (-2661)
Vietnam                       45664.00                                        89088.00                     (-43424)

Total                                                                                                                        Less 79,881

So the numbers actually say that 90% of the shortfall is due to 6 countries alone, barring UAE all the other 5 countries mostly buy Natrual so I am assuming their demand shifted to Africa because prices were low there. So i don't really see a pattern of consumption fall , its merely a shift to the cheapest source of supply which is a normal reaction in today's global scenario.

The third factor is ofcourse profit booking. Since the demand was slow and most exporters unwilling to take undue risk there was profit booking at every stage which kept the prices down. Everytime there was a jump there was someone in the market willing to sell at below market price based on his stock value rather than the prevailing prices which continues to confuse and pull the prices down.

Usually in a bear market i would be worried if its a supply based fall...however when the fall is demand based it usually means there are pockets of opportunity for both seller and buyers and the trends are very hard to predict.

Back to the Present :-

So what is actually happening with the new crop now. The views ofcourse differ from person to person. The monsoon has been early this year , but it has also been very strong. The sowing usually starts after we have the first few rain showers and the soil is well irrigated .

Talking to the local's the sowing has started in area's where they got a chance and is good in terms of size so far , some area's ofcourse are still waiting for the rains to stop. I am usually not flattered by the sowing number's because atleast for sesame seed they are irrelevant unless we have the perfect climate during harvest. A few days of rains during harvest can change the number game drastically as we have seen in the past.

Pls find below the rainfall chart for June-July and you will notice that the rains have been far far excess in all major sesame growing area's except for Rajasthan. However its still too early to say if that's good or bad. My gut feeling however say's that since sesame is so sensitive to water and with a good monsoon now confirmed the farmer's would be taking a lot of risk placing their bet's on sesame.

Ofcourse the traditional sesame farmer would continue to do it , but for new acreage to be added its a risk you have to keep in mind.

US$ will continue to remain volatile it seems and its movement can decide what levels we will see in the coming future. Overall I believe with low global stocks another failure or bumper crop in the coming season in India , China or Africa and turn the tide's either ways.