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Monday, August 25, 2008


As we all have already experienced, it has been a crazy year for Sesame and probably for all
other commodities as well. The speculators loved every bit of it as they moved the markets up
to dizzy heights and then let it fall at will.

Sesame prices touched unthinkable highs of around $3500 PMT for Hulled and almost $3000 for Natural.When the prices were rising everyone thought they would continue to go up but demand slowed down and we saw a huge correction in the prices since.It was sad to notice big defaults from suppliers in the start of the season and then surprisingly when the prices fell it was the buyers who started defaulting and that created a further panic in the market and prices stagnated.

Another major factor which contributed to the price fall was the Rumor of ban on Oilseeds by the Indian Govt , they
infact did ban the Export of Edible oils but thankfully left the Oilseeds out of the ban preview. With a lot of commodities already banned now it is unlikely that they will ban the Oilseeds in the coming months as Oct-Dec is harvest time formost of India's Oilseed products.

The USD is still playing hide and seek and after falling by as much 13-14% in the Oct 2007- March 2008 period it has
once again risen by about 8-9% in the last few months and we hope it will continue to trade in this region making the
export competitive , but then again it is impossible to judge its movement.

We saw a very very quite buying period in the last few months as a lot of buyer were sadly stuck with high priced cargo and with low demand at high levels the sales obviously went down .Sesame as we all know is not a necessary
ingredient for most and with high prices of each and every commodity worldwide there was bound to be some slack in
demand. However what I noticed in my 3 week trip to Europe and US talking to clients and end users that atleast for the bakery industry the fancy toppings are becoming a must for survival as the consumers are demanding something "extra" for the high prices.However Big consumers such as McDonald's have been rumored to have approved lesser seeds on their buns.Another big market has emerged meanwhile in terms on Tahini for direct consumption and as an important ingredient in Hummus which is growing rather rapidly globally. The Sesame oil consumption continues to grow despite high prices in places like China and other South East Asian countries.

The big question in everyone's mind at the moment is the new crop in India and China. The Chinese crop as always remains a big mystery for everyone , however the initial report from various sources point at a satisfactory crop this year with no major crop damages.However certain people also did mention that a lot of sesame area was converted into Soya on Govt instructions as they aim to be self reliant on Soya which is their basic food ingredient by 2015. Overall the estimate is that China will have a satisfactory but surely not enough to fulfill their entire demand and they may end up importing their shortfall and may not buy as aggressively from India due to the 10% duty wavier that they get when importing from African nations.

The data that we have at the moment shows that India exported about 270,000 Mt from 1st April 2007-1st Aug 2008 which is up about 80,000 from previous years and almost corresponds to the crop estimate that gave in Dec 2008.The growth was mainly due the excess import of about 40,000 Mt than usual from China , about 10,000 Mt by Korea and about 10,000 by Turkey and ofcourse other nations imported a bit extra as well like the USA , Syria , Malaysia , Taiwan etc.
Origin Initial estimates 2007 Crop in Sept First revision in Nov 2007 (Mt) Second revision in Dec 2007 (Mt) Initial estimates 2008 Crop in Aug (Mt)
MP/UP 250,000 180,000 150,000 110,000
Rajasthan 100,000 90,000 75,000 110,000
Gujarat 50,000 40,000 35,000 70,000
Others 20,000 15,000 10,000 10,000
Total 420,000 325,000 270,000 300,000
Initial estimates 2008 Crop in Aug (Mt)

The above is just our initial estimates and these can ofcourse change depending on the weather in the coming months till actual harvesting is done. The carry over stocks in India are almost negligible at the moment and as not much buying was done from overseas we believe that the stocks in various destinations are also not big as probably everyone at this moment wants to get rid of their stocks before the new crop cargo starts arriving at the destinations.

We believe that the new crop should be ready for shipments around End Sept/Early Oct but the crop will arrive
in full swing by Mid/End of October.

Now to the prices.In usual practice the new crop prices should be at a discount of about 15-20% from the closing
levels of Old crop in September , but the market dynamics have changed vastly over the past few years.All will
depend on how aggressive or watchful the buyers are at the start of the season.It will be hard to judge the bottom
this year as the stockiest and defaulters made big money this year and with little or no shipments in the July-September period most of their cash flow will be open.Liquidity play's a very important factor in India as their is virtually no credit at local buying level here and all business is on spot payment.
No news of any Korean tender for the moment but we believe there should be one next month and then again in October.

A lot of buyers and suppliers have had bitter experience this year and we hope that the Buyer's will finally recognize
the integrity and good work done by some of the reputed exporters and will support them in order to clean up the
trade and make life easier for all of us.

We have the rainfall data and monsoon maps and data with us and if you wish to see please feel free to ask us
for the same.If you need any other information , please feel free to contact us.

We also take the opportunity of inviting you to visit our Stall at SIAL , Paris from Oct -19th-23rd this year at the
India Pavilion.It would be our pleasure and honor to meet you there.