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Monday, April 27, 2009

Korean Tender- April 27th , 2009


As most of you would already be aware by now that a Korean Tender for Natural Sesame Seed was announced last week on the 24th.


India got 4800 MT in the range $1343 PMT - $1363 PMT. The balance 1200 Mt was awarded to Pakistan.Once again notable absence of African participation. The prices in Africa as still on the higher levels and with limited stocks there are well they do not seem to be in a hurry to sell cheap, specially when they know the fact that any revival of demand from China or the Ramadan demand has to be catered by them as no other origin is in a position to offer huge quantities.

The tender price is very smartly based on the anticipation of a good summer crop in India , as these levels do not match the current prices in the market we doubt that it was a discounted sale of stocks. The new summer crop arrivals should start to trickle in the first week of May and as the arrival pressure pick up we should see some price corrections. However we don't expect a free fall in prices in May as the initial arrival pressure will be eased with the buying for the Korean Tender which needs to sail out by next month end.

Everyone is now talking about a big summer crop , but as we mentioned in our previous reports the stock situation other than the Summer crop is very small. Everyone is waiting and counting on the summer crop and that optimism should act as a potential barrier in free fall of prices.

Moreover African exporters seem to be in no mood of offering a huge discount anytime soon and that could help keep international price level at sustainable levels.

A few more Korean tender will surely be announced before the Indian new crop in September and that means at
conservative levels about 15,000 Mt ( Including the current tender )from the summer crop will be dedicated to the
Korean tender alone.Which leaves us with about 25-30,000 Mt at max for rest of the worlds supply.However with
current demand at historical lows we still do not see any huge buying rush specially in the summer months.

Its been a boring year , just as we anticipated in our report at the start of season in November.There seems no reason that the next 4-5 months will be any different.However the buyers should be careful as ultimately the end users are consuming , if they are not supplying then probably their competition is.


If price is a deterrent in the sesame consumption , then I am hopeful that people will either learn to live with the high levels or the prices will fall in the coming new season in October. If other substitutes have replaced the use of sesame due to low prices will have lower cushion for a fall compared to sesame and that means at lower levels sesame will not just regain it demand but should also take market share of other substitutes just as they have taken its.


Prices of most food commodities, already up by a fifth in past over a month, are bound to climb as the global economy heads for a recovery. Though the prices of most industrial commodities have fallen on year, prices of food commodities like sugar, edible oil,pulses, fruits prices saw a sharper rise, pinching consumers.


What has been interesting this year is that the market has been very range bound , moving 3 steps forward and
then 2 steps back , the same story should continue in the coming months as well. This should bring stability to the prices and with a narrow band to move in the client confidence should resume and we hope to see some cheer back in the market.

Will be very interesting to see the actual size and impact of the summer crop in the coming few weeks.

USD still remains a major price determining factor as we have noticed in the recent past..

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