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Wednesday, June 17, 2020

Market Report Sesame Seed June 15

I hope everyone is safe and healthy wherever they are and taking all needed precautions to keep themselves and their loved ones safe.

In these tough unpresedented times we need to look out for each other and I am sure this nightmare will soon end. Sesame Seeds as we know is way down in the priority list of the food chain in most cases so I don't really expect any dramatic changes in our trade but nevertheless this is what I and you do, so its important that we discuss it in all sincerity.

Summarising ,Last 3 Months till Date ( India) :

1:- Till early March the world was starting to feel the heat of Covid scare, China had a lockdown, EU/US cases had started to go up and widespread panic was setting in , but things were still moving. By end of March things were a little more scarier , India Imposed a lockdown suddenly and things came to a standstill. EU/US and other countries soon had restrictions too, public places and restaurants were the first casualties.

2:- With 99% Hulling factories closed in India the stock piled up and pending orders started to build up , Imports which were coming got stuck at the ports, shipments which were supposed to go out got stuck at various levels too. Most buyers understood the situation and co-operated. At consumption destinations the warehouse stocks started to shrivel up.

3:- April was a total wipeout in terms or production, by early May things got a little easier , production resumed in limited capacity , Imported cargo's got cleared and a lot of the excess cargo booked by Indian companies got diverted to China as things were still better there. But still the stock buildup for the hulling factories was more than normal and with a sudden fall in Rupee it was priced much much higher than anticipated , adding to the woes were exorbitant demurrage/detentions that the importers had to pay.

4:- By end May/Early June the Gujarat summer crop started to pour in and prices started correcting , the pending orders moved out , most without any problems but some clients did take advantage of the situation and revised/cancelled contracts which I personally think is not the right way to do in tough times.

5:- Then came the Korean Tender news , with attractive low levels India got all 9000 MT as expected at really really competitive levels. Just as we thought its going smooth the bad news about Bengal Double Skin crop which is a huge crop for Indian crushing industry started to come in, with damage numbers ranging from 30%-70% a buying frenzy by stockist and speculators tried to pull up the market for a short time.

Summarising ,Last 3 Months till Date (World) :

1:- Africa started to face problems in shipping by April ,with on and off lockdowns and limited availability of container and vessels which meant that a lot of cargo which could have been sold or shipped out got stuck at the origin.

2:- The consumption worldwide started to go down too, the worst hit were stand-alone Bakeries etc, unlike India or developing nations the Breads/Bakery shops in Europe/America are mostly located at prime real states to bring in better and bigger clientele who would happily pay a premium for their product, now with limited movement a lot of that business has moved to supermarkets, where people can just buy everything they need under one roof and so smaller shops are on the brink of closure. How many people that you know can still walk into a bakery establishment and pick up that bread which is kept in an open basket that "Could" have been touched by someone else. Not many I am sure.

So basically the Super Store sales of bread by Corporate suppliers are Up while the artisan breads like the NY Bagel's or Simit etc will be down. In Middle East sales of bulk pack Tahina to restaurants will be down but small bottle sales for home consumption could be up. 
Bulk Sesame oil sales to restaurants will be down in South East Asia but Domestic bottle sales may have been isolated.Someone catering Sesame sticks/Crackers to Airlines/Hotels may have zero demand but someone selling Sesame cookies for a government run food program may see a quantum jump. So depending who you are actually catering to your perception for Demand and Consumption could be different.

3:- Sesame Seed as we know is just an Ingredient ,I've said this before and I'll say this again, we are probably the only industry that doesn't spend money or time in promoting the benefits of the product that we sell/buy.

In a pandemic situation while many products marketed themselves as Immunity boosters we simply rely on people's decision to Order a "Burger" , Eat "Hummus" , ask for some extra "Tahini" in their Falafel burger, Use a little Sesame Oil in their Hot Pot because it smells and tastes better , buy a fresh "Simit Bread" covered with Sesame Seeds while they stroll through the markets or garnish their Salads/Noddles with some seeds for that crunchy taste.

Let me know if missed on some other fancy uses :)

Our product identification is mostly on Junk or Soul food which sells more in Happy times , I hope Happy Times return soon.

I really hope for my sake and yours that people keep doing what they have been doing all these years because I'm yet to meet a person who craves for " Sesame Seed" . 

We were, We are and we will continue to be replaceable if we continue to do business as usual.

Running Numbers and Facts :-

1:- Unfortunately Indian Export/Import numbers have not been officially updated so we will simply have to assume. I assume the Imports were same or maybe higher than the average of 15,000 MT/Month which means about 45,000-50,000 MT was imported in these 3 months , mostly for Hulling i.e.

About the Export numbers the situation is exactly opposite , The exports in no way could have been higher than the average of 20,000 MT/Month, Remember India has not exported more than 340,000 MT annually in the last 5 years and this year we would end up below 300,000 MT when the numbers do come out.March was slow, April was a wash out and May numbers would probably be higher just because a lot of pending shipments moved out not because a fresh demand.

Now that means a lot of cargo from India is on its way to the consuming markets where 
A:) It will replenish the reduced stocks.
B:) Ease out the supply situation as the consumption is low anyway.

2:- The Indian Summer crop can easily be estimated to be about 60-70,000 MT for White , however most of it is good 99/1 grade which will go for NSS sorting with limited supply available for Hulling unless someone desperately needs ready cargo. The stockiest/ speculators will hold about 50% of this cargo for later supplies.

3:- Carry over stocks situation in India is the same as it was in March , nothing much has changed as factories didn't produce , spot demand was met by the Imports and forward demand by summer crop. Whatever cargo was sitting in the warehouses is still very much there , I would estimate it to be around 25,000-30,000 All India basis easily. This cargo probably wouldn't be available easily till we get sure shot news about the winter crop. Stockiest are already loosing money on it and they would like to hold on a little longer in anticipation of some sudden demand or a crop failure.

4:- Imports from Africa have dried out , most people had diverted extra cargo to China or elsewhere and with high Rupee and falling domestic market it made no sense to book afresh in Africa which means only limited volumes will come into India in June/July. This I think is an interesting change to watch out for. If you book Africa today the price parity for Hulled Sesame today will certainly be not below current levels which practically stems any chances of a big fall in prices for Hulled in the coming months.

5:- As you all must have read there was a huge movement of Migrant workers from Cities to the Villages in India , they are back now and not going to the cities anytime soon as the general perception among the poor is that " Why would I get stuck in a strange place in case of another lockdown when I can be home with my family " and 
Its a rich man's imported disease which is more in Big cities , villages are safe " also
the jobs are anyways limited. So these people in villages will surely not sit idle , they will do manual labour provided by the Govt/NGO's etc which right now is about Restoring Water bodies in preparation for Monsoon, building check dams on river fronts etc. Apart from that the government is leasing out a lot of land it owns to landless farmers for cultivation , they would grow something, not saying " Just Sesame" , but whatever grows in that area for that matter, pulses, grains, oilseeds, vegetables , cattle feed could be anything but surely not a single farm will go untilled this monsoon season. India will have a bumper Kharif Season.

Which means the first part "Acreage of Sesame" will be higher than previous years no matter what anyone says.The second part of "Yield/output " will depend on how favourable the weather remains for the period of the crop

6:- Tanzania /Mozambique and other East African crops have started to come in and most say the numbers could be around 220,000-240,000 MT

7:- Port stocks in China were last said to be hovering around 200,000 MT mark with outgo reduced from 3000 MT Daily to below 2000 MT Daily , however new arrivals are said to be slowing down as like all smart buyers they did not buy much for May/June shipments in anticipation of East African new crops and slowing consumption. 

8:- Indian Exports at "BEST" could touch an average of 20,000 MT per month in the next 3-4 months till new crop is available , So say till 15 October "MAX" we need about 100,000 ( Hulled/Natural combined ) at " MOST " to sustain our factories, anything more, it simply sits in the warehouses and anything less we panic and start booking more from Africa. 

Easy as the number may look, its now a battle between the " Have's " and the "Have not's " , one Exporter/Trader may have excess and another could be short , this delicate balance is what's probably going to keep the market going for the next 3-4 months till ready availability for all returns.

9:- If the worldwide consumption is down I think the real impact will start to show in the coming months more than it is evident now. Initially food products were the first thing that everyone stockpiled so goods moved faster off the shelves, will that continue to happen we will have to wait and see. 

A drop of 30% in consumption is reported from all areas worldwide and probably in all commodities.Since we are eating less from outside the food wastage numbers which were said to be about 30-40% of the total consumption worldwide have started to show up, also the diet patterns could have also been altered towards more fresh local produce.

A 30% drop in consumption for Sesame Seed over 6-8 months gives the world a buffer of about 300,000-400,000 MT.

EU population is around 700 Million and in the peak tourist season of May-August almost 300 Million tourist visit various EU destinations and on top of that the local population moves , Germans sip French wine, French enjoy the German beer , Italian relish the Greek Salad while the Greeks are enjoying Spanish bruschetta. Japanese probably stock piled for their Olympic demand , thats not happening this year either. All that is not happening this year.

Not trying to post a grim picture but facts are facts.

Conclusions :-

As always the market is segregated into segments, Bulls, Bears based on fact , lets see the two in isolation.

Bearish Facts :-

A:- Consumption is down worldwide, its not coming back to its original levels anytime soon.

B:-Port Stocks in China are high and should continue to remain so as their new crop arrives in 3 months time and new shipments from Tanzania/Mozambique move in. High priced stocks in China are stuck for good and can/will only move once they are heavily discounted which creates downward pressure in the market anyways.

C:- Unstable currency worldwide are changing the number games everywhere, farmers get a fair price sometimes even if the dollar price seems low.

D:- Everytime there is a quantum jump at one Origin the buyers now quickly move to the next , this is creating a natural hedge which creates high priced buffer stocks which eventually flood the market in desperate sales.

E:- A Big Brazil crop is almost round the corner, Chinese/Myanmar crop comes in 3 months, Indian crop in 4 , then followed by Africa by Dec. So the world will have ample fresh supply in the months to follow , the window for exit is that much smaller. You can get in through the big door but you will have to crawl out the small window.

Bullish Facts :-

A:- India did not buy much from Africa in the last few months so Imports will dry out from next month onwards , fresh bookings will not reach Indian ports before September.

B:- Pan India stocks are low and of higher prices, they won't be available cheap anytime soon or at least not in in bulk.

C:- If the Covid situation improves we could see a demand resurrection as destination stocks are low in consuming countries apart from China.If another lockdown happens in India the supply Lines this time will be severely effected.

D:-With a good monsoon expected , Winter sesame crop could get affected.

My personal gut feeling is that markets will remain rangebound till we get over this Covid mess , Food Inflation is the last thing any government wants as it makes them an automatic target for the media and Villian in their citizens mind. Any business that tries to increase their retail consumer prices will face a massive backlash.Price jump in commodity means the retailers/food processors start loosing money.

In these tough times it is almost criminal to be thinking or hoping for Expensive food as the poor suffer the most eventually. Stable rangebound business is good for everyone for the time being.

Cheap prices will surely not spur up demand as consumption sectors are limited in current situation but Expensive prices can surely divert it elsewhere. Overall I think current levels are fair to everyone, Sesame going down to 3 figures is a possibility ( Old stocks in Africa/Brazil etc) but it would be temporary , on a higher side I think $1350-$1400 FOB levels for Natural Sortex is Max.

Hulled Sesame I see a bottom of $1500-1550 FOB and on the higher side a top of $1700 -$1750 Max. i.e A 10% upward-downward range from current levels in the next 3-4 months.

Thank you everyone , Please do write back with your suggestion and comments and feel free to connect with me on WhatsApp and share this report . It would be our pleasure to serve your requirement to the best of our ability.


Mukul Gupta
Shakumbhari Expo Impo Ltd
Mob :- +91-9837084355 ,+91- 6396010144
BRC , IFS and SEDEX Certified/Audited Company.

Monday, February 17, 2020

Sesame Seed Market Report Feb 17th 2020

Hi Everyone,

I was just going through my last report of September 2019 and found that our assumptions were true to quite an extent.

"Whats happens in Best case scenario is that for short period the Domestic demand will kick in simultaneously with the Export demand and prices may/may-not rise depending on the intensity of crop arrivals at market yards, if they don't then we simply  Import less, even if they Do we start Importing Smaller Quantities. Both cases will cool off the prices slowly and stabilise them. Max movement in such a scenario should be Plus/Minus $100-$150/MT either ways.Markets remain range bound , Win Win for everyone."

That was good 5 months ago , Lets talk numbers now to first understand what worked and what they have in store for us over the next few months.

Indian Exports in the Last few months viz a viz Previous year.

                                            2019                            2018
September                     22,400  MT                 31,500 MT
October                         23,480  MT                 26,650 MT
November                     26,540  MT                 22,120 MT
December                     37,400  MT                 24,070 MT
                                     109,820 MT                104,340 MT

Indian Imports in the same Period

                                         2019                            2018
September                     11,090 MT                  7,100 MT
October                         11,100 MT                 13,800 MT
November                     29,500 MT                 21,400 MT
December                     19,500  MT                 25,500 MT
                                     71,190  MT                 67,800 MT

Mostly stagnant, only the sudden spike we see in December 2019 was due to the Indian Government notification of Export Incentives being discontinuing from 1st Jan which lead to exporters rushing and trying to move the cargo faster. I belive the January 2020 Data when its available will show that the Exports have fallen or stabilised in Jan 2020. Import I would like to belive should remain in the range of 20,000 MT for Jan.

Indian crop despite all odds, our expectations and according to the survey given by IOPEPC was about 300,000 MT which I think holds true. We saw peak daily arrivals in Mid October- End November in all 4 major states i.e UP/MP/Rajasthan/Gujrat touch 30-35,000+ bags collectively , so that's about 2500 MT x 45 days which makes it about 120,000 MT , in December is dropped down to say half of that so thats roughly 40,000 MT  and say around 500 MT per Day since Jan till now which should add the numbers to around 200,000 MT .

Apart from this I would assume about 20-25,000 MT volumes would have gone directly from farm to stockiest or arrived in smaller market yards data for which is not extrapolated properly. The balance will trickle slowly and steadily in the next 5-6 Months.


Markets right now are at their lowest of the season but still in the range of Plus/Minus $100-$150 from the highs, it would be interesting to see if they can breach the bottom or revise upwards in the coming months .

What we see at the moment is limited supply and a stable supply line but a slightly discounted/aggressive selling from Hulling units to keep the volumes flowing, once the volumes are covered the discount goes down , so the best price is only for the people who enter first and after that its the same for everyone else who steps in. Yet we see hesitation in the market.

The trade needs to understand that Sesame is now truly a global commodity, with goods flowing in all directions and every 3-4 months there is a crop coming out somewhere which can change the basics of price assumptions depending on its size and demand.

Major Crops flow globally is as follows

China( September) ---> India/Myanmar (October ) -----> Sudan/Nigeria/Burkina/Ethiopia( Nov-Dec)-----> Somalia( Jan/Feb---->India Summer (May)--->Tanzania/Mozambiue/Myanmar(June/July)

I could be off by a few months for some origins and missing some,  but I am sure you get the basic point. The play is not " Who has how much " , the play really is. " Who needs what , WHEN" , its all about the timing , the consumption pattern worldwide have been well defined with sporadic and short bursts of Demand and dull periods , these rarely change the consumption volumes but do bring in the sense of false triggers. There is definitely a consumption growth worldwide but its not concentrated, its mostly spread over the whole year and all destinations combined.

We also need to understand that there is a consumption and production limitation everywhere , India can Import or have any size of crop  but there is a top line in terms of production that it can manage, If my maths holds true we roughly have a built up capacity of Max 25000-30,000 MT for Hulled + Natural Sortex Per Month , Natural/Black etc of course can be anything more depending on what grade is Exported. Similarly Imports into India are limited to few countries depending on the lowest price available , above a certain threshold India just cannot afford to Import since we need to Re-Export Hulled from it , so one origin might have all the sesame and India might be totally empty but we just cannot Import unless the price works out for Hulled Sesame. This limits our options dramatically in the world trade.

China/Africa :- 

This is something the world was not ready for, when Corona Virus started we all thought it would go away soon but it seems to be getting bigger and as on today it shows little sign of slowing down.
We all hope that it will go away soon and normalcy will return to China and the rest of the world. However since China is by far the biggest Consumer of Sesame we cannot deny that it will certainly have an impact on the volumes. Just heard that they are replacing/Sterilising  their Currency Notes since they could be biggest carriers in cross contamination, if its come to this I doubt things would be back to normal in a hurry. Even when the virus goes away it might take weeks before people flock to restaurants or decide to eat out as they used to.

FOOD FIRST , Since everyone is taking precaution in China I would assume that at the moment people would be stocking food in their homes in eventuality and anticipation of the worst , which means most products on the store shelves have either already been picked up or will get consumed/picked up soon enough.
Since most factories are closed or working below capacity it is highly unlikely that the shelves will be replenished anytime soon , that specially since things like Sesame Paste/Sesame Oil/ Sesame cakes etc are not necessary/staple foods for the masses. The "HOTPOT" culture has taken a hit , it was one of the major consumption points of Sesame Oil/Sesame Paste and it might take a while for that to return to normalcy as well.

The port stocks in China are surely moving slowly and the cargo already afloat will eventually reach them too , however from what we have heard they are slow right now in fresh purchase from Africa and the congestions created at the Chinese ports might delay fresh order shipments.

Having said all that we know that the Chinese market is a Giant and they know how to bounce back , if the Virus goes away soon enough and they decide to push up the production to replenish the market and build up surpluses we are in for a wild surprise.

This probably is that most difficult part to predict at the moment and things could move either ways.

Looking at the worldwide stocks I have a feeling that atleast till May when Indian summer crop harvests we should be range bound despite the above fear. Indian government has still not clarified if the Export Incentives will be available after 31st March or not. If they don't then Indian prices will definitely move upwards by 2-3% Minimum in the coming months.

Since India is more or less Import dependent at the moment as you saw from the above numbers a slow down could mean that we are also apprehensive in Importing big volumes as well , this could create a strange situation, if and when the demand revives and which probably will coincide with the Chinese demand the African levels may see a sudden spike since both China and India will enter at the same time and the spot markets here might panic even more due to limited volumes.

Overall I can sum up by saying current levels are pretty attractive for at least 3-4 Months ahead, slow but steady volumes in both buying and selling should yield good returns.I would not suggest  Speculating in either Short/Long positions in big volumes, the best strategy would be to have a rolling stock at all times to protect your top line and to at least cover the stop losses in eventuality of swings in your supply lines, the markets may panic anytime which more often than not results in wrong decisions for both spot and futures.

Someone wise once said "Far more money has been lost by people preparing from Corrections or trying to anticipate Correction than has been lost in taking the Correct decision."

Sunday, September 29, 2019

Sesame Seed Market Report Sept 29th 2019

Hello Everyone,

What a time to sit down and write about Sesame. The market is super confused , the weather is super unpredictable and everyone in trade is simply clueless. From the Buyers who refused to touch sesame 2 weeks ago saying prices will fall further to Sellers who were eager to empty their warehouses at any cost ,the tides have suddenly turned upside down.

If Olympics had a medal for Fear Mongering and Gossip our Sesame fraternity would win it hands down every Time. Our trade doesn't believe in alternate outcomes, each and everyone could give you a look into the future, give out numbers with so much confidence that it can create a self doubt on your own business acumen for a moment. Anyways to each his own , I'll just write my long observations as usual.

First lets see some numbers which would help up understand the picture better.

Number Games :-

Let me give out some official numbers first

Indian Winter Crop Estimates for the last 5 yr
          Indian Production ( Kharif)
2019-20                               Take a Guess

Indian Export Import over the last 5 years

The numbers above are little confusing because in India the Crop estimates are of Winter Crop in October while the Import/Export Data is from 1st April-31st March of the next year. Let me try and make sense out of these numbers with the exact data that is available with me.

Indian Export from 1st September 2018 till 30th July 2019 ( 11 months ) ---228,055 MT Export

Indian Import from 1st September 2018 till 30th July 2019 ( 11 months ) ---132,292 MT Import

As we can see from the numbers Indian Exports have dropped drastically and Imports picked up dramatically. If we assume that in the last 2 months Aug-Sept 19 the trend was same we roughly Exported 250,000 MT while roughly Importing 150,000 MT , using just 100,000 MT from our domestic production.

Since the stock situation is pretty much empty here in India at the moment I would assume we either consumed the balance domestically or in reality the last years crop was not even 190,000 MT that we thought it was, since summer crop of 2019 (Roughly 50,000 )is also not in warehouses.

It also means that we need our Domestic supply only in small gaps before Imports arrive or in small quantities by factories/Natural Exporters who are not Importing to sustain our Exports while our domestic consumption stands at roughly 100,000 -120,000 MT max on a YoY basis
(Excluding Quantities grown and used for Oil)

Whats happening :-  Really ,Whats Happening?

I wish I had the answer but like everyone else its all guess work at the moment.The markets were super bullish last year as they should have been since people had Old CarryOver stocks which were paying handsome returns meaning leverage to gamble big and more, also as we saw from the numbers the crop size was ridiculously small.

Then Vs Now  

1:- Last years crop was ruined premature due to heavy rains in August, by the time we got to harvesting it was pretty clear to everyone that it was a disaster, Exporters in India sold based on Import Parity from Africa and readily covered too. The markets got stretched to begin with when everyone rushed to cover shorts and stocks ,Once big volumes of Import cargos landed in India the prices just could not sustain the bull run. The trend continued all year long after that. 

The local trade in India understands this well now, they can  fire up and stretch the markets to a certain point after that the volumes from Africa just start to pour in and drowses the Fires. We saw a rally of about 60% in Oct-Nov domestically whereas the African markets went up by roughly 30% in that period. 

2:- This year on the other hand the sowing was fantastic to begin with , Sesame at the time of sowing was one of the highest priced commodity , the weather forecast of less rainfall this year was perfect for the Sesame crop ,irrespective of our opinion the farmers are smart and know what they are doing. They were right as reports of beautiful lush fields was coming from everywhere. On the Field trip I saw plants as high as 7 feet and full of pods so the yields should have been Epic this year.

Video Link to watch the Field Trip

3:- Everything was going smooth till Mid September, people were gearing up for a big crop, India started to refuse offers from Africa, Buyers started to refuse our offers in anticipation of the big fall when crop came in. Little forward business happened for sure but unlike last year it was not backed by huge quantity booking from Africa.Everyone thought they could wait and get a better deal later. 

This means that the Ripple effect got negated to quite an extent, last year India was buying aggressively in Africa so their price would go up say $20 , then Indian Suppliers would say see Africa is up we take it up by $30 , we were going round and round in circles for a while.

The TWIST :- 

1:-From "All is Well"to"What the Hell" Mother Nature suddenly decided it was all too boring, let's get some fun back into the game. So from the Driest July Monsoon we now have the Wettest Sept.

It started to rain in almost all Sesame Area's from Mid September and continues.I was on a field trip last week and although there was little damage that I witnessed and thankfully since the rains have not been strong in the past week and hopefully should stop in a few days time the damage should be under control even now.

All this talk and numbers now boil down to the next 4-5 days, If rains actually do stop we might still harvest a good crop, certainly bigger than last year, if they don't or the damage is actually bigger than we fear we might be down to numbers close to last year.

Its painful that after all the care and effort the farmers fate is decided by this 1 Week.We cannot even comprehend the Pain, The Agony of loosing a good harvest/a standing crop that the farmers will go though if things do go wrong. Let us hope and pray they don't , we still might get our Sesame from somewhere eventually but some poor farmers will go to bed on an empty stomach for a long time.

The End Game :- 

1:- Best case Scenario :- Rains go away , we find out damage was not as widespread and we harvest a good crop. Good is relative so I shall put out a number to it, 300,000 MT - 320,000 MT is good. Its achievable too in my opinion based on the massive sowing and yields that happened this year.

Whats happens in Best case scenario is that for short period the Domestic demand will kick in simultaneously with the Export demand and prices may/may-not rise depending on the intensity of crop arrivals at market yards, if they don't then we simply  Import less, even if they Do we start Importing Smaller Quantities. Both cases will cool off the prices slowly and stabilise them. Max movement in such a scenario should be Plus/Minus $100-$150/MT either ways.Markets remain range bound , Win Win for everyone.

Why because Indian Exports have dropped as we have had tough competition from Africa, first it was Natural but now even for Hulled. Our stronghold of Korean Tender has fallen this year and we might not be able to get it back unless we have a huge crop and price ourselves competitively. Pakistan Imports to India are not possible this year so they would concentrate to go direct into our markets and with a much weaker currency might push us out of some too since they have harvested a fairly big crop this year so we actually might not be able to export more in the first place so even this quantity may be more than enough.

2:- Worst Case Scenario :- Rains decide to stay a little longer, the damage that they have done is widespread and we get a relatively small crop , say 200,000 MT , that's 50% less than our normal crop of 400,000 MT + and also what people expected so logically speaking its as bad as it gets. Anyone predicting lower than this is either a Genius to have assessed the damager correctly or horribly misinformed about the extent of sowing.

Worst case Scenario would be more dramatic, we would start booking aggressively from Africa which would shoot up the prices there and the whole running in circles would start all over again, this would ease only after actual cargo's touch down at Indian ports.The next few months would be volatile but then things would cool down as it did last season, with 7 African Origins available for India to buy from ( Nigeria, Somalia, Sudan , Ethiopia , Burkina , Uganda, Mozambique ) we certainly are not going to fall short of Sesame for our Hulling Industry ever. It just takes a little while to get the wheels rolling thats all. Also there is a limit to which Africans can up the prices for Indian demand of say 100-150,000 MT because their prices are not directly linked to us but to the Chinese who buy 10 times more, if prices go up too much the Chinese demand slows down and halts the momentum to create an equilibrium.

Then ofcourse we have the Infamous " Bengal Double Skin " Sesame, once the prices move above a certain threshold this Oil crushing grades finds it way back into hulling and stops the bull by its horns.

Even for the worst case Scenario I dont see the markets touching last year's high anytime unless China has something else in mind. With Chinese Imports falling in the first 9 Months, a steady Port stock in excess of 150,000 Mt , a relatively good harvest in China and their New Year falling early in 2020 I doubt they are in a hurry to have more excess good when they can afford to wait.

There is no Korean Tender quantities left for 2019 so that is off India's back as well for the next 3 months.

Economy is not moving as fast as expected and with serious liquidity crunch in India the holding capacities are stretched, there is a political uncertainty in Sudan which means they would prefer to do back to back business rather than gambling on stocks. Currency demand in African nations is a major factor for their aggressive sales and I' don't see any reason why that is going to change anytime soon, they need the $'s so the volumes from there should continue to flow out as usual with little hoarding unlike in India.

I have a feeling if we don't panic we can have a range bound market all year long, definitely not a year to enter the markets when they are on an Upswing or to hold on to goods in anticipation of hitting unrealistic targets and certainly not a market to be greedy and to wait when the prices are on a slide to catch the bottom. Trade at all levels , go slow when prices are shooting up and stay equally clam when they are falling and the averages will be fabulous.

In the panic rally of last 10 days we are back to levels of 1 month ago and the way forward  all depended on the factors we discussed above. Current levels are still not overpriced in short run but also not attractive enough to go long either.

Its ANUGA time again and we look forward to seeing you at our booth.Please do spare some time to visit us. 

BOOTH NO- F-038 , HALL- 11.3, 
5th OCT - 9th OCT 2019. 

Bull markets are born on pessimism, grown on skepticism, mature on optimism, & die on euphoria.

Tuesday, May 7, 2019

May 7th Sesame Seed Update :-

Good Day Everyone,

With the Summer Crop ready for Harvest I thought it was time again to update.

After the disastrous Winter Crop in October, 7 months have passed and as expected it was a roller coaster ride with both Bulls and Bears getting their share of action. However comparing prices on a YoY basis we are still in a bullish phase.

Looking at some of the factors for the Up's and Down's :-

Run up to the Top :-

1:- With limited Old stocks and a much smaller Winter crop in October it was pretty must evident that the prices will shoot up, they went up dramatically and crossed $2000 levels for Natural  and $2500 for Hulled at one stage despite the USD being weak. 

2:- The panic multiplied as people who had sold forward wanted to cover their shorts and buyers who anticipated further rise covered excess volumes long.

3:- Stockiest saw a good opportunity and soon the market reached a situation where you started fearing defaults from suppliers and buyers practically started a double hedge on their purchase.Meaning the Importers in India who had booked African cargo for their forward sales also started to buy in India and Vice Versa. 

The Pull Down :- 

1:- We soon had a situation where prices in India were going up faster than the buyers at destination could adjust to, the low priced cargo's were being sold at a discount which caused a resistance for fresh buying as there was practically no price parity.

2:- The USD started to strengthen which had a reverese impact on domestic prices as India struggled to achieve global equilibrium.

3:- The Imports finally started to trickle in, now as we discussed these were the double Hedge cargo's which meant that most people now had excess cargo and fresh buying came to standstill as everyone was in a profit booking mode and fresh demand was slow as everyone had already booked excess.

4:- Sudan/Nigeria apparently had a good crop and with China not buying aggressively they shifted their focus to Indian market and fed them without any problem. With the supply lines well defined it got easier by the day and prices cooled down.

With all the factors being played out over the past 7 months the prices still managed to hold steady at a certain level, this showed the strong bottomline resistance due to lack of a big trigger. In commodities it is easier to push up the markets with sentiments alone but to pull back down is harder without a major panic trigger, which usually is physical availability of goods.

Statistics:- Official Government  Data (Rounded off)

                               2017-2018               2018-2019(Till Aug)          2018-2019( Till Feb)

Indian Exports       336,850 MT               157,580 MT                          286,662 MT

Indian Imports       26,270 MT                   13,360 MT                             70,650 MT

Assuming the monthly average remains constant for both Import and Export by the end of April 2019 we probably have exported about 325,000 MT and Imported about 90,000 MT.

For exports our volumes are pretty must constant as I had explained in my last report of
 5 Nov 2018 in discussion point number 5.

The import numbers on the other hand have seen a sharp increase, averaging about 9500 MT per month over the 6 month period for which data is available.

Bottom line is that over the past 7 months we have exported about 170,000 MT and Imported about 70,000 MT , since Imports are for Exports only I would assume all that we imported is already consumed or is in process and we have consumed about 120,000 MT from the last crop , plus we consumed a minimum of 100,000 MT for our domestic winter demand.

The numbers add up beautifully, IOPEPC as I have said before has been the closest to real crop predictions and the stock situation in India clearly indicates they were right this time too. Domestic supply has practically dried up, there is absolutely no talks of big stocks in any of the market yard with smaller quantities of 50-100 MT max being available with few people.

If you ask me to put a number on the stocks available in India at Market yard levels I would say in total not more than 25-30,000 MT all 4 major states (UP,MP,RAJ,GUJ) put together, thats about 350,000 bags of 80 Kg Each or about 1200 Truck loads. 

Breaking up the numbers even this looks highly unlikely.

Let us play God for a while and try to predict future :-

Stocks :-  Stocks in India and at destinations which can feed India the cheaper cargo's for Hulling are at an all time low. In India we cannot Import to re-export Natural so that factor is inconsequential, having said that even the destination which can provide good quality natural have limited supply.

New Crop in Africa :-

The crop in Tanzania look alright, with some contradicting report but there are some doubts over Mozambique crop. Overall nothing drastic that can create a panic or cool down the supply lines.

Summer Crop In India :-

The crop looks promising as of now, with no major change in sowing numbers or news of damage we are hopeful that the quality and size would be good.If I had to put a number on the size of the crop I would say about 40,000 MT but about 30% of this is Black Sesame and another 20% of Super White Natural which fetches a good premium for domestic consumption and hence too expensive for export parity. Practically speaking summer crop could ,at most supply about 20-25000 MT for export purpose which is about a months volume max. 

Port Stock in China :-

The last news was that their stocks have started to come down slowly, they have maintained a steady balance of about 150,000 MT but with low import volumes coming from Nigeria/Sudan/Ethiopia/Burkina the port stocks are likely to go down and will need fresh buying from Tanzania/India for replenishment as Mozambique crop is smaller.

Imports :- 

Imports from Sudan/Nigeria/Pakistan/Somalia etc which picked up pace have definitely slowed down, their supply lines are strained and with problems in Sudan and conflict with Pakistan these 2 origins are effected the most.

Sometimes I feel we are oddly hypocrital when it comes to Africa, the buyers in first world countries who speak of poverty and hunger in Africa have been telling Indian suppliers that their offers are above African quotes, which then prompt the Indian Hullers to try and bargain down prices from African suppliers even further to match their levels and the chain continues. At the end it is the African farmers who gets paid little less eventually.

Anyways having seen all the factors I have a feeling we are exactly in a situation which we were in October. Small Carry overs, Small Crop. The triggers are all but ready and the biggest factor would again be demand.The Export Numbers clearly suggest that volumes have not dropped , consumption has not decreased, infact the markets which were resistant to prices above $2000 levels have pretty much accepted them and slowly but steadily the bottom has moved up.

A fall in prices means that someone in China would step in and clean up the market, a major increase and India would start buying aggressively in Africa once again, with no stocks domestically to pull it down and no major import volumes expected to land quickly this rally could sustain and could only stop due to profit bookings and lack of demand.

I have given this example to many people and I reiterate again, No one likes to buy the last fruit on display even if you know it will only be available next season, however when the season comes and the display is stocked again with fresh arrivals we all jump in and buy despite the fact that our fridge could be loaded with something else.Human Nature I guess.
I think this is what will happen when summer crop arrives, everyone will buy a little bit irrespective of demand or need.

As for the prediction for the next 150 days till we see the next Winter crop in October, I have a feeling we have about 40 Days of Stable , 40 days of correction and 70 days of UP side left. 

The game this year has not been about price at all, for people who made money and those who lost the difference has been the timing of sale/purchase.The exit doors are becoming smaller and smaller and if you are playing safe and trying to catch the top or bottom, chances are you might never get through, on the other hand the people who are working with good suppliers and rolling volumes get more chances to cover losses if the made any and also make a lot of money when that sudden short time spike comes.

Looking at the way business has changed over the years I can safely say the Chinese Model of having good at Port/Warehouse/in hand/possession or say near consumption points is far more intelligent than having long term contacts in your books.If you are not covering yourself for spot demand and sudden spikes in prices you are loosing a lot more than your competitor who will eventually take the market share from you weather you like it or not.

My conclusion would be ,do not be Short, Carry little extra and roll that volume in tandem with supplier prices and do not cut edges with suppliers for small savings, in a product which costs more than $40,000 /FCL saving $500 by choosing the cheapest supplier can end up costing you $5000 eventually.Timing is the name of the game.  

On a personal note I doubt prices will fall to the lows it touched this season . A slow steady increase is more likely to sustain than a sudden rally.Most bearish reasons have already be factored into the current levels apart from the New Crop Arrival pressure. Current levels are a good buy and going ahead expect a slow steady rise ,right upto last season's top levels at best.

We welcome you to visit us at the Anuga 
Mukul Gupta ( Director)
Shakumbhri Expo Impo Ltd
Tel   :- +91-131-2615164 , +Mob:- +91-9837084355 , +91-6396010144


Monday, December 10, 2018

Nov 26th Sesame Seed Update:-

It has been almost 50 days since the new crop arrivals have started.The crop as we all know by now was projected to be small and It is quite evident from the arrivals that the numbers were close to reality .The crop is short by almost 60%. As against 400,000 MTons last year we have a crop around 160,000-170,000 Metric Tons this year. 

Factors which pushed up the prices in Octoberwere
1:- A smaller crop.Panic from Supply side.
2:- A much smaller carry over.
3:- Anticipated domestic demand of India.
4:- Covering for the forward sales. 
5:- Stockiest being active at low levels. 
6:- A very strong USD which moved from around Rs 69/USD to around 75/USD in a short span.
7:- Anticipated strong global demand.
However ever since Diwali holidays got over the markets moved in the opposite direction , it was a natural correction which was inevitable looking at the one way movement of prices that happened for 3 weeks.

Factors which have made the correction happen are
1:- Everyone covered their short sales as a Stop loss in a rush.
2:- Almost anyone who is into sesame trade is now holding some stock , although I doubt the volumes are big since the value and prices are almost double.
3:- The Rupee gained back whatever it lost which means in Dollar terms the prices are almost same.
4:- The African imports have started to trickle in which will keep the supply chain well lubricated for the months to come.
5:- Crisis with money roll over as people bought for their forward sales as well and everyone would like to hold the cargo physically now, also the farmers dumped everything into the market yards as they got a good price for their produce and they need cash upfront.
6:-Since the markets were moving up so rapidly the buyers in general decided to wait and watch as the destination spot markets were lower than the Import prices being quoted from India.
7:- Profit booking from smaller merchants who had low price stock.
8:- Conservative buying by China which had good port stocks and decided to first bring its local prices up to global price levels.

Factors that will stabilize or push up the markets should be  
1:- The arrivals have dropped to historic lows, never in the past 18 years of my business have I seen that big producing states of UP/MP collectively put are less than 200-300 MT. Total bag arrivals from farmers are less than 3000 Bags in 2 States almost 20 Major yards put together. Rajasthan and Gujrat are substantially low as well.
2:- The strengthening Rupee once it stabilizes at around 69-70 range will leave the scope for local prices to rise which will start reflecting in USD quotes made to the buyers.
3:- People who imported from Africa wanted prices so stabilize in fear of defaults if prices kept rising,with the correction it has made things a little easier and I am hopeful that defaults from Africa will not happen in a big way, once their cargo gets loaded they will also want prices to go higher as the low priced imports were mostly forward sales but the high priced cargo's are mostly additional quantities. So the bears will suddenly switch side to bulls.
4:- Since the buyers waited it meant that a window of 2-3 weeks of low purchase happened which must have brought down the destination stocks to bare minimum, once the spot markets empty out the Panic at destinations will kick in.
5:- With replacement price still remaining high domestically the stockiest will hold on that much longer creating a tight demand supply chain. 
6:- No Buyer at High levels , No Seller at Low Levelsituation should prevail for all.
Overall I think looking at the global situation prices are fairly placed for the season ahead, irrespective of trying to catch the Bottom as buyer or Top as a seller it would be advisable to slowly be in the markets at all time to avoid getting into Panic buy/sell situation.Periodic corrections will happen and the movements this year will not be subtle but in 2-3% Range , thats more than $50 up or down at any given time.

India will have to import Sesame Seed from Africa in large quantities to keep its Hulling factories running and the last Korean tender showed us that the supply will be limited this year irrespective of High prices. In a bullish year with High Prices we always advice to try and buy the best quality, stick to the quality you know best.

We are of the opinion that the Sesame Seed prices will remain firm. With 10 months still to go the chances of UP days are more than the Down Days.