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Saturday, March 29, 2008

Brief Sesame Seed Market Report March 2008

We had the pleasure of attending the "2008 China Conference on Sesame & Sesame Products (CCSSP)" which
was held in Beijing , China last week. The meeting was attended by many prominent speakers and traders from world over.
There were detailed discussions and presentation on various crops and stocks from India, China and African origin and the changing trends in world market.I would like to summarize the observations that I was able to make there , the below are my own interpretations on the points that were discussed there and may vary from other eminent people who were attending.
1:- The World stocks which include the stocks at Chinese ports , new crop arrivals in South America , Africa along with the stocks in China ,India and the estimated holding stocks with buyers do not seem to exceed the total volume of 215,000 -225,000 MT's.

2:- Many destinations in Africa including Ethiopia are almost over with their stocks and the little that are left there are in very strong hands and will not move out in low levels and the stockiest are not in a hurry to sell at the moment.
3:- The world demand estimated on import data's from past few years reflect that the total average demand should be in the range of 290,000-300,000 Mt for the coming 5 months before any other major crops comes out, this is including the traditional high period demand in the coming months for Ramadan but not including the occasional demand that may arise due to Beijing Olympics this year or the annual growth of about 4% in demand which has been recorded over the past few years. About 500,000 tourist from abroad and 6 Million visitor from within China are expected to arrive in Beijing over a period of 20 Days during the Olympics.
4:- The total shortfall in the world trade this year could be around 80-90,000 MT.
There seems to a large changing trends that has been observed in the world market over past few years , even with high prices it has been noticed that Sesame used in Tahini/Halva in the middle eastern countries has become a energy food for the poor there which is unlikely to be replaced with any other commodity in the near future.Although it is hard to sell with the high prices but it still remains a very important food ingredient there for the poor. The same goes for Chinese food habits where Sesame Oil despite high prices remains an integral and irreplaceable part of their staple diet.
We observed that there is also a new market that is developing with high prices of Sesame seeds where it is finding its way in the food chain along with various nuts as a high priced food garnish in gourmet food across restaurants. Talking to various people we learned that with high prices it is getting difficult for the end users to justify the price of simple dishes but with little garnish of sesame or nuts they can present their menu better and get better price realization. Like we say in India " Food is first for the eyes and then for the Tongue".
Prices in India remain firm , for the first time in 5 months we saw a correction in the mid of Feb after a Ban on export Edible Oil was imposed by the Govt of India , there was a big rumor that the next logical step if the prices in domestic prices do not stabilize would be banning of Export of Edible Seeds which would also include Sesame. That would certainly mean that prices in global markets would jump to unimaginable levels .
Corrections as we expected were inevitable but surprisingly have come not due to lack in demand but due to the Ban scare.
The ban is still a possibly so we suggest that buyer take precaution and call for their cargo as soon as possible and stock in their warehouses in case of any eventuality.Rising food prices are a concern of the Govt's worldwide and a similar concern was presented by the Myanmar contingent as well and they are also facing a possibility of an Export ban this year. Myanmar have had Sesame Seed export prohibitions earlier as well so a new ban cannot be ruled out ,in which case their exports which mainly goes to China will have to be supplemented from other destinations creating additional pressure in the market.
It was also noticed that Europe seems to be the only destination where the concentration of Sesame Imports is on Hulled Sesame more than Natural grade, the Hulled Sesame unlike Natural has production restrictions and at present India seems to have captured about 60-65% of the world's , the other major destinations supplying Hulled Sesame are mostly catering to a very different market.Hence it seems that there cannot be a huge stock of Hulled anywhere
with any buyer's in the world, certainly not to the extent that it could last them for 5-6 months before new supplies start. Ofcourse if someone decides to drop their sales volume over this period it's a different story but with regular sales the stocks are definitely not enough and that is the reason we have seen slow but steady buying even at higher levels.Most buyers have held back their buying but we hope and expect the demand to resume anytime soon.
Koreans picked up 1200 MT Crushing Quality Sesame from India and 300 MT from China at $2400 /PMT levels and another Korean tender for about 4000 MT is expected to be announced soon.We could see some profit booking in these but that would only mean more buying at local levels keeping the supplies tight.Markets in India have been quite over the last few weeks mainly due to the Ban scare and also due to the liquidity problem in the market,with end of Financial year in India on 31st March the cash flow problems multiply even more.
Overall as we expected right from the start of the season the market is still bullish and as we expected the jumps have been quantum in nature this year.We expect the trend to continue , its getting to a stage where selling at market price will become difficult only if one can make an average of all his buying the prices can be matched, that is the reason the buyers must have noticed the huge price differential in the market at the moment.We expect another quantum jump anytime the cash problem is solved and as time goes the scare of Ban will also subside which will renew the stockiest confidence.