The new Korean Tender after a delay of 2 weeks is finally declared today. Although the quantity was
reduced to 4000 MT from the initial expectations of 5000 Mt , India still managed to bag 3000 Mt as anticipated
and about $ 120 (Average) higher as compared to last tender declared on March 5th. This clearly indicates that
Africa is still expensive as compared to other origins and may continue to be as their crop size is nowhere near normal.
1000 Mt @ $1042 ( India)
500 Mt @ $1038 "
500 Mt @ $1048 "
500 Mt @ $1042 "
500 Mt @ $1047 "
1000 Mt @ $1035 (Pakistan)
4000 Mt Total
Interestingly if you look at our last reports of March 5th you will notice we mentioned about this price rise as follows.
QUOTE "If we take the Korean Tender and African Prices as benchmark , it still leaves India a whooping $100 cheaper and that much more window to increase at the least in the coming months." UNQUOTE
We did see a panic situation in March which took the prices even higher than expected, to levels which were definitely not sustainable as the prices shot up too much too quickly , from what we saw the prices were being governed by 3 major factors :
A ) Forward selling by both Exporters and Importers to their respective clients which needed to be covered and as the prices started to rise it created a panic situation.
B) Genuine reason that the arrivals virtually stopped at farm level creating a short supply and as a general rule the stockiest came into play.This factor still remains valid as the material in the market is now barely enough to sustain a normal Export demand of about 100,000 MT for the six month period April-September from India.
C) All the global crops which are supposed to create supply pressure during Feb/Mar ( Africa & S.America) failed to do so as none had a normal crop , irrespective of the prices it is still a fact that none of the origins have a big crop and as the earliest new crop is still a good 5 months away ( China comes out first in September) we expect the volatility in the prices will stay.
The Indian market needed a correction and that is exactly what has happened in the last 2 weeks, however most of its effect is diluted by the big fall in USD against Indian Currency. The Rupee is at its 9 year highest levels against the USD which makes things that much more complicated for exports. Since the start of the season itself we have seen the $ fall by as much as 8%.
We have time and again repeated that despite the rising price there will be some opening which would allow a good bargain , from what we see that now is the time to keep a close watch and also not a bad time to cover and make a good average base for the coming 5 months.
The likely demand for Ramadan and from China is still a major factor and once that happens it could create a similar situation as last month where everyone waited and waited and then stepped into the market all at the same time. The markets are now at a very sensitive stage and any small indication of demand will definitely push up prices to it is advisable to step in slowly and quietly.
As the prices have gone up almost 30% from season start level it is more likely that the stockiest are sitting on merchandise which is purely their profit having recovered their principle amounts by disposing 60-70% of the total , this gives them enough liquidity and financial strength to hold on to the little they are left with and not offer huge bargains. As on date as well with falling prices it would not be possible to get out bigger volumes at similar levels , just as we said in our last reports that at some stage you may have the desired price but not the desired quantities.