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) .