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.