Wednesday, November 12, 2008
Markets as we expected and mentioned in our previous Market Report started going down after the intital covering pressure eased off and the arrivals picked up after diwali.News of a good African crop is spreading around and this time the Africans have priced themselves very competitively.
The markets in India have falled almost 12% in the past 2 weeks however a portion of this fall was negated by the corresponding fall in the USD against the Indian Rupee which had touched an all time peak of 1 USD = Rs 50.15 in the last week of Oct. The Rupee is currently trading in the range of Rs 48- Rs 48.75 to a USD. Hence a 5-6% of the fall was negated by the Ruppee- USD fluctuation.
In real terms the prices have fallen back to almost the lowest levels they touched this season. The arrivals which picked up after Diwali Holidays have once again dwindled back to same or even lower levels in certain regions. We see some resistance at current levels as the domestic consuption in India picks up pace as the winter starts to set in. With 100% of the crop now harvested ,talking to the farmers and taking into account the average arrivals over the past 30 days from various local markets ,we can assume that the total crop in India should be around 220,000 Mt -240,000 Mt this year.,which falls roughly in the range we assumed last month.Last year the total crop in India was estimated to be about 380,000 Mt.So we are clearly
short by about 150,000 Mt , in addition to the problem of poor quality.
The quality remains a major problem this year, with almost all destinations having major rain damaged seeds.This is creating a big confusion in the market, the price variation between the lowest and the highest quality is almost 12% in the domestic market. The lowest being sold as Hulling ( This is actually the crushing grade, which is rain damaged ) and the highest ofcourse the 99/1 grade.Thea ration of Hulling Grade and 99/1 Grade arrival in the market is 90:10 this
year where it traditionally is about 60:40.The lower grade although looking very attactive in terms of pricing is giving much less yield and more and more sorting rejections which is taking the costs up. In the factory its hard to factor in these cost immediately but we believe sooner or later everyone in the trade will realize this and we should see some benchmark levels being formed. Due to this huge variation in the domestic pricing we see the same for the export
market as well , where our friends and clients have told us that the price band in Hulled Sesamebeing offered from India is almost $100 at the moment.
In a way we did want the prices to come down to sustainable levels to see the demand coming back to India but taking into consideration the current financial crisis we have our doubts that the buying pressure would resume anytime soon, the volumes are certain to drop this year but that could also mean slow but sustained buying all year round this time.Liquidity pressure and global turmoil are bound to affect the sentiments worldwide.
The arrival pressure has fizzed out from India, no doubt that the farmers are stocking marterial anticipating a price hike and usually the farmers dont panic that easy to pump all their cargo in the market if the prices fall. They might hold on to their stocks for good 5-6 months and continue to get limited amount in the market as and when they are in need of some money. African crop is out as well with shipments already taking place from Nigeria.Nigerian quality which traditionally goes to Japan for crushing is being tried by the middle eastern countries for the reason of cheaper pricing. Ethiopia and Sudan are just slightly cheaper than India. With the information we have from Africa , we dont see their prices falling too much as they clearly know that India is not their price competitior anymore
We now have to wait and see how much more the prices have to fall before the demand resumes and brings stablity to the market. Overall a 5% fall from here would get us below the lowest levels of this new crop and that would mean that technically all the stockists will start to loose money assuming that they all bought at the lowest levels.I am sure there will be some resistance at those levels and keeping aside the few volatile ups and lows that we may have a very "Boring" stable levels all year round. Just as last year the prices could not have just kept going up the same holds true for prices going down too much.Once again its really really difficult to judge the bottom this year and as we always emphasize its exteremly important to have a good average and little but consistant business this year to sustain oneself.India we believe still remains in a strong position as far as Hulled Sesame is concerned and although we have heard about some quantities being served from Africa and Middle east they are of limited quantity and accessible to a limited few.
We fear that a lot of companies might close their Sesame operations this year , we already have news about a few companies trying to finish their existing orders and stocks and step away from the market.Actually its not the sesame that is selling this season, "Only relations are selling". Friends and clients are back to the most trusted suppliers , and with slow down in demand they see no reason to go fishing around and risking huge amount of their money on someone unknow. I think that will and should be the trend this season as business will be done mostly on back to back or hand to mouth basis.
It has been a year or uncertainity , we started the year 2008 with extreme bullishness and by the end of it everyone seems to be bearish. Sometimes I get the feeling that in India the sesame prices are somehow magically linked to the stock markets.
Tuesday, October 14, 2008
U.P/MP 110,000 100,000
Rajasthan 110,000 100,000
Gujrat 70,000 70,000
Others 10,000 10,000
Saturday, September 27, 2008
Wednesday, September 17, 2008
It seems like the very same reasons that took the markets to dizzy heights last year are holding it back this year around. If you refer to our market report of September 2007 ( Refer to http://sesameseedmarket.blogspot.com/ for old reports) you will notice that our main concern's then were the Shortfall in Chinese Crop and the falling USD against Indian currency which made the exports actually look more expensive than they actually were.
This year its again the same factors but totally reversed , China is said to have a better crop than last year which means that instead of "compulsive" buying which it had to do last time it can wait for the best opportunities and the cheapest destinations. The USD has appreciated by about 10% in the last 2 months and have made the prices look cheaper than they actually are in comparison to the local prices here in India which remain more or less constant with no major fall in the past 3-4 weeks. Of course we still expect that prices can go down further as and when the new crop arrivals start in full swing.
Its actually nice to see that the buyers have not panicky yet and have waited and covered only as per their requirements which has created stability in the market and a few traders and brokers have already started to get nervous and offering throw away price. However I think with all the bitter experiences of last year the buyers will be much better judges of character and service this year round.
After the high's of last year and the prices down by almost 50% compared to those high levels,
it is an open secret that current levels are very very attractive to the Importers despite the global slowdown in all Oil seeds but the fact remains is that just like the prices could not have kept going north it cannot just keep falling as well. I wish it was possible to judge the bottom but like last year we once again believe it is better to have the best lowest average price rather than knowing or missing
the lowest price.
The crop situation in India remains almost same as till 3-4 weeks ago, it has been raining heavily in Rajasthan and Gujrat in the past week and that is some concern again.Its not possible to judge the damage at such and early stage but we hope all keeps well. U.P and M.P are confirm to have not more than 50% of their total of last year and that should keep the stockists and speculators busy.Once again we think the up's and down's will be in quantum from now on as with the changing trends the degree of price variation is no more in small proportions but in 2-3 or more percentage points on daily/weekly basis.
The sowing in Africa is supposed to have started and we should get some news by next month about their sowing pattern's and estimates.The crop damage in Myanmar (Burma) is also confirmed and that should have some affect on china as a lot of that cargo goes to China through unofficial trade channels. The real impact of that will be known around End Oct/Early Nov when the real Chinese demand starts to build up in preparation for their New Year in January.
Our Initial Estimates for the India crop size is as follows
Origin Estimates Aug (Mts) Estimates in Sept (Mts)
U.P/MP 110,000 100,000
Rajasthan 110,000 100,000
Gujrat 70,000 70,000
Others 10,000 10,000
We also take the opportunity of inviting you to visit our Stall at SIAL , Paris from Oct -19th-23rd this year at the India Pavilion.It would be our pleasure and honor to meet you there.
Monday, August 25, 2008
|Origin||Initial estimates 2007 Crop in Sept||First revision in Nov 2007 (Mt)||Second revision in Dec 2007 (Mt)||Initial estimates 2008 Crop in Aug (Mt)|
|Initial estimates 2008 Crop in Aug (Mt)|
The above is just our initial estimates and these can ofcourse change depending on the weather in the coming months till actual harvesting is done. The carry over stocks in India are almost negligible at the moment and as not much buying was done from overseas we believe that the stocks in various destinations are also not big as probably everyone at this moment wants to get rid of their stocks before the new crop cargo starts arriving at the destinations.
Monday, May 19, 2008
As expected that most bidder's for this tender were clearing out stocks so not much buying pressure has been witnessed in the market after that. However what it has done is cleared off all the "Pressure" stocks from the market. The last few months have been very quite , prices despite very low demand has managed to sustain bottom line levels and as everyone thought that there is large scale stocking at farmer or stockiest level , none of that has turned out true. The main fear that the exporters had was the Ban on exports and since most of our exporting community have
forward contract's of 1-2 months in average it looked like a very huge stock at that moment. Thankfully the Govt of India did not ban the exports and most stocks were cleared off ,although it took many drastic steps to control the prices by reducing import duties to Zero and implementing stock limits for traders,manufacturer's and exporters despite that we did not see a free fall in prices clearly indicating that stocks are indeed limited.
We are now in a situation where any return on demand is most likely to push the markets back up.Almost 70% of smaller Hulling factories have finished their stocks and have taken a pre-mature shutdown and will now resume only with the new crop. Few that are operating will continue to run at back to back contract and will not go long anymore this season. The Gujarat
summer crop that was eagerly awaited has finally arrived , we had various assumptions from people who indicated the crop to be as big as 30-40,000 Mt and as low as 20,000 Mt .In the one week of arrivals the average arrival in Gujarat is 500 Bags/Day. Even if we assume the crop to be 20,000 Mt , it roughly means about 250,000 Bags (80 Kg each) .If we do the math's that means to touch that volume we need to have an average of 10,000 bags per day for the next one month.
Our data tells us that its highly unlikely as even the main crop did not touch those levels this year.Also it is unlikely that the farmers are holding back crop as the levels are still very high and they are making more than double of last yr levels.
Sowing will commence is Early/Mid July and the new crop if all goes well arrives in Sept End/Early October.Everyone here talks of a big crop this time as the prices were high , but the fact is with all commodities gone up the farmers have so many to choose from and its too early to predict anything.However the farmers will be back to purchase farm seeds in June and our assumption is that they would need about 3-4000 Mt from the market(1% of total output) for resowing and that should clean up the market even further.
It is understandable that with high prices the demand has gone down but it still looks unlikely that the buyer's have enough to last them for next 5 months when the new crop arrives.China has been very quite and consuming its own stocks.Africa has been steady all this while but with low demand we have seen some panic selling lately.Lot of defaults heard of in Turkish market after they booked at high levels and the prices came down.The same for other markets as well. It is rather surprising as there were very little defaults from India this year despite the high levels.
We still believe that the demand will resume and we will see some prices corrections as that and the Govt of India are the only 2 factors holding the prices down .Central America and other destinations continue to trade sideways and the same with Indian prices if you leave out the discounted prices being offered by traders and exporters who are exiting the market for this season at the moment.
As we all know that there have been 2 major incidence in Myanmar and China this month where reportedly over 100,000 people have been killed and millions have been affected. We hope and pray that god gives peace to the souls of the departed and strength and courage to the one's who survived this cruel act of mother nature.
Thursday, April 3, 2008
Wednesday, April 2, 2008
KOREA TENDER NEWS- SESAME SEEDS
INDIA – 300Mt at $2278 ,INDIA -300Mt at $2288 ,INDIA-500Mt at $2347 ,INDIA-300Mt at $2349,INDIA-1600mt at $2387,INDIA-500Mt at $2388,PAK-300Mt at $2385,PAK- 200Mt at $2389.
The African's were notably missing again showing the bottom line strength their stockiest and exporters are showing,also Chinese exporters which were seen enthusiastic during the last Korean tender were seen missing from action at these levels , indicating that their prices are still higher than India's at the moment.
The Govt of India announced some drastic steps to control price rises of food commodities in India , notably the reduction of duty to 0% on Edible oil imports , this could mean the edible oil seed industry can breath a sigh of relief for a little while as the govt will first try to acknowledge the impact of duty reduction , ofcourse with all International Oil prices on a high it might not have the impact that they foresee. They also imposed a ban on Non-basmati rice and that sends out a strong signal to the exporting community to curtail prices.Strict stocking quota will also be imposed to curtail hording which is leading to price rise. All these measures have given negative signals and we are already seeing reluctance from most exporters to enter into long terms contracts.
Its been a very quite last 2 weeks as usually happens in end March to Mid April but we are fast getting to a situation where all exporters are eager to ship out existing contracts first and clear their warehouses before getting into new contracts.We might see more back to back limited prompt shipments after April.We also believe that most people will have hurried their contracts and with god's help if there is no ban for this month will have cleared about 75% of their stocks. No one wants to step in the uncertain market at the moment and that would mean almost 70-80% of the hulling factories will take a shut down in or by end of May as the conversions have also eroded and demand slowed down.The brave few in the market will definitely pounce of that advantage and jack up the prices if and when the demand resumes.
As we discussed in our past reports that prices in the market are vastly varied and dependent on who has stocks at what levels and at what levels are they willing to clear those stocks out and that is the reason the buyers are probably seeing vastly different quotations from their various suppliers, this is also now evident from the Korean tender where the prices are actually lower than the current market prices.We believe if you are looking for a bargain April could be a very good month but buyers should be prepared to collect the cargo on prompt basis and stock the same at their warehouses rather than looking for long term contract which will carry a lot of risk for both suppliers and the buyers in the coming months.
We still believe that International market is bullish , its been 6 months since the supplies started , Chinese and Indian low level prices have been shipped and probably consumed by now , the African and Central American crops started late and that means their stocking happened at much higher levels and they would definitely like to make a profit of their stocks and will try to keep the prices high for as long as possible.Most buyers are now sitting on mid levels stocks and some high levels prices too as the business done on high levels was limited , that means that if prices fall more from current levels most buyers will stand to loose a lot of anticipated profit which is not a good sigh for trade. We are in a correction stage at the moment , April has always been a dull month for Sesame however with the "Lantern Festival" in China , the Olympics demand and ofcourse the much anticipated Ramadan buying could renew the demand and help take the prices back up. We have already touched the highs and there is no reason to believe that those levels will not be touched or breached once again. We saw huge panic and concern the buyers showed during the bull run clearly showing the demand undercurrent that remains.
Saturday, March 29, 2008
2:- Many destinations in Africa including Ethiopia are almost over with their stocks and the little that are left there are in very strong hands and will not move out in low levels and the stockiest are not in a hurry to sell at the moment.