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Wednesday, September 26, 2007

Korean Tender September 20th /Market Report September

The new crop Korean Tender was announced on the 20th and as expected the whole quantity of 4500 MT was awarded to India once again. The price range was in the $1025 - $1055 spectrum which is higher than most people actually anticipated.
The were very few African and Pakistani bids which can be due to the fact that African stocks are almost over and they are not expecting new crop before Jan-Feb 2008 and a similar situation for Pakistan as well , also the Pakistan crop is expected to be smaller than last year
mainly due to the fact that it is almost grown in the same climatic region as Gujarat which faced erratic climate this sowing season.
In all our previous reports we have repeated that the crop is delayed which is again holding true. Its almost end of September and the arrivals in Gujarat and Maharastra are barely exceeding a few hundred bags daily. In U.P and M.P the arrivals were barely 4-5 bags which commenced only last week,the seeds arrived are those that small farmers harvest early to clean up their farms and is of crushing grade with high moisture content.
Gujarat and Maharastra will have crops smaller than last year. Sowing area as well as yields per Hectare in these states have reduced substantially.
U.P , M.P and Rajasthan are heading for good crops .The sowing area has no doubt gone up.The areas under cultivation on an average has gone up by 30-40% as compared to last year , but the yield has dropped as some areas had excess rains at plantation stages which destroyed the sowing and also rain deficiency in certain areas at a later stage has affected the crop yield and quality. The quantity should be higher than last year by about 15-20%.This should cover up the losses made in other states and the overall quantity should be same or maybe just a little higher than last year , the last
crop barely lasted us 11 months as the current stocks are almost zero so the next should be just about enough as well keeping a tight demand-supply ratio all year.
The major factors to watch out this year should be the forward trade and the fact that most buyers are not holding big stocks and will need new crop merchandise at all costs as soon as possible. The fear as we have seen in the past is everyone suddenly stepping in to cover at the same time, this should keep the prices high. A lot of forward and speculative trade has happened in the last few weeks and the pipe lines in India are empty as well so we expect a mad rush for buying at the start of new crop. New crop in full swing is not expected before End Oct/Early November around and after the Indian festival of Diwali.
The freights as we all know have gone up almost 2.5 % as compared to last year levels and the US$ has gone down against the Indian Rupee by almost 14% now. Above that there is the rising costs of local transportation and High Interest rates.All these factors put together should keep the average levels high this season. However we feel that there will be windows to cover at attractive levels , everyone needs to stay in close contact with their suppliers as we don't expect that the low levels opportunities will be of longer durations.The price variations as in the past should be quantum and sudden in nature rather than a gradual so the important factor should be not getting the lowest price but maintaining a lowest average.
China crop is now confirmed to be around 40-45% short , which mean that irrespective of when they buy , "THEY WILL BUY". If not from India then from Africa , in either case they will push up the prices whenever they start buying and from what we know there is already a lot of trade inquires in the market for the new crop.