MARKET REPORT SESAME SEED NOV 23TH , 2009

What kind of world do we wake up to each morning these days? And how did we get here?

Good news ,we are getting used to price levels unheard of earlier. That is a good sign because high prices are the curefor high prices.Producers crippled by rising input and labor costs realize to their amazement they still have a market.

Once again its been a very strange start to the sesame season in India.Our initial estimated posted on the September 9th report of the crop being about 280,000 MT in stark contradiction to the market sentiments at that time seem to be more or less on target at the moment looking at the arrivals figures of past 1 month in India.

Just as we mentioned in the last report the crop was certainly late and although the prices did fall in anticipation of a good crop early in October the speculators and stockiest just went berserk suddenly by end of the month. It seems like the late crop arrival led to a lot of short covering which combined with the factors of lower arrivals , bullish sentiments of the stockiest , almost zero carry forward stocks apart from some in Gujarat region , weak USD,the crop delay in Africa,a very strong domestic demand which is likely to support the markets till Jan end and to top it all the announcement of Korean tender in the end of Oct all played their part in the sudden rise.

However all that is past and the big question now remains about the prices for next few months.I wish i knew the answer too. As you would notice from the above para there were a lot of factors put together that contributed to the price rise and in my personal opinion it would take just about the same number of factors to pull it down as well.Individual factors like lack of demand or a good African crop may bring the prices down a bit but they are bound to jump back from them quickly enough.

Now looking at the trigger points one by one

1:- Arrivals are unlikely to pick up in India anymore.If price was the factor farmers should have already brought in the cargo inhaste to the yards but they didn't. This could mean 2 things that either all the estimates are wrong and in reality the crop is not as big as estimated or the farmers will continue/prefer selling in small lots and are maintaining a benchmark price below which they will not sell.

2:- Although the domestic demand will drop drastically after Jan , by then it would have substantially finished a huge quantity from the market. We have always underestimated the domestic sesame consumption in India but in the last 2 yrs the market has seen and knows that the demand is steadily increasing.

3:- Stocking this year has happened at 4 different levels a:- Farmers b:-Middle man c:- Wholesaler/Stockiest d:- Manufacturer/Exporters

The different levels give that much more room and financial support to the market to avoid that sudden fall which we have seen in the past. Even if one levels panics there is another level to support the market.The problem in India is that with high prices govt has put a stock limit on most of the active commodities , Rice, Wheat , Sugar , Edible oil all have stock limit so there are more and more stockiest looking for newer and other commodities to stock and hoard. That means the crop is now divided into a lot of smaller parts which makes the fall pattern slower and rise patter more drastic.

4:- African crop, the biggest factor .Well in my opinion they have always been taken for granted by most buyers and I don't think that will be the trend in the coming future anymore.The crop in Sudan has been very actively consumed within the middle east itself , with Egypt emerging as its biggest buyer. Ethiopian seeds continue to enjoy their preferential status in China and with their superior taste/preference advantage should continue to be priced competitively.The Japanese buyer have been known to be very fond of the Nigerian seeds and although they are

not active in the market at the moment , its just a matter of time before they will step in and pick up the south American and Nigerian crops in a frenzy. All other African nations usually follow the price trends in the " BIG 3 "and mark their prices accordingly.

5:- Korean Tender...We've already seen Africa pricing themselves above India in the last Korean Tender and despite a rebidding they were not very active in it.I think with all the banking,shipping and quality constrains of Korean Tender , India will continue to be its biggest bidder. That means about 40-50,000 MT Natural Sesame from India in the coming 10 months is set aside just for that.

6:- Chinese demand is unlikely to come to India at these high levels which means they will do all their shopping in Africa, and despite the fact that they have a good crop they will shop for sure.Myanmar crop is down about 40% and that means the 100,000 Mt which Myanmar supplied to China is no longer available and although not all 100,000 will be needed but that still means that China will have to look elsewhere to substitute a part of that quantity.

7:- South American crop is estimated to be of the same size if not smaller and just like last year they will continue to feed their own niche market without much surplus to impact prices in India and Africa.

8:- The USD is also unlike to regain past levels. Currently 1USD = 46.40 INR.

We still believe there is a huge psychological resistance at $1750 FOB for Hulled from the sellers point of view and on the upside at $1950 from the buyers point of view. In Natural the levels seem be at $ 1450 FOB and $ 1650 FOB respectively.It remains an open secret that the buyers are short and they have to resume buying at some point and the market here seem to be waiting just for that.

Ofcourse we will see dips from time to time on profit bookings and as always we sincerely suggest the buyers to take advantage of the dips and try to make an average rather than waiting for the absolute bottom before stepping as that bottom may be impossible to judge in this volatile market.We agree that most buyers think that this is another bubble and may burst anytime but sitting on the shore waiting and watching will be no good either , the best way forward to accept the fact that volatility is here to stay and we all have to learn to live with it.

No one expect and predicted India's shift from being a rice exporter to a rice importer ,this has been triggered by concern India may itself be running short of this daily staple.India, a low-cost producer and among the top three exporters of rice in the world, will continue to export premium basmati rice, which is beyond the budget of most families.All this doesn't make sense does it? But these are bitter facts.

India should continue to be a force as far as Hulled Sesame is concerned, the domestic market is growing and developing rapidly just as it did in china a few yrs ago.All of us forget that fact that even 10 yrs ago when India was exporting less than 200,000 Mt of Sesame (Hulled/Natural)combined it was still consuming the balance 400,000 it produced domestically.The only difference is that at that point the domestic consumption was price

driven while the current consumption is a combination of price and changing eating habits.Sesame oil in India has moved up from being a cheap mixing option in Edible oil to a self standing commodity.

Even so, bread, buns , burgers and bagels are foods that we choose to eat. They are not as critical for our health and survival as Lentils and vegetable.Or so we thought. Not anymore. The Indian consumer remains willing and able to buy them directly or consume them through processed foods without much outcry. Sure, a few families will cut back. But not so you would notice. Our new food choices are here to stay.

ANUGA

WE CORDIALLY INVITE YOU TO VISIT US AT ANUGA,COLOGNE.
OCT 10th-14th , HALL 1.1 BOOTH F 039a. INDIA PAVILION.

MARKET REPORT SESAME SEED SEPT 9TH , 2009

I am sure everyone is awaiting the new crop arrival of Sesame Seed in India. The crop as we all know by now is a little delayed.Usually we see the 60 Days crop of Gujrat coming out by Early September and the normal crop by Mid of September after which U.P/M.P/Rajasthan crop follow around end October and early October.

However this year we think the whole crop is delayed by about 2 weeks so we don't see the arrival pressure's building before Mid of October or also possibly by 2nd half October as the Diwali festival in India is on the 17th Oct and farmers and traders are usually on a week's break during this festive period.

The crop situation has thankfully improved a lot over the past 2 weeks as compared to what it was perceived in early August with a very bad monsoon situation.In certain areas the drought is still very severe and we expect crop failure's in those areas, these area mainly fall in the Rajasthan/U.P/M.P border region.

The sowing this year started a little late and then we saw a big gap between the rains, some areas were able to sustain this period and with the rains back now we hope all will be alright.The only doubt that remains is a situation like last year where late rains resulted
in a huge crop damage at the time of harvest.

As of now from what we have heard and seen , India's crop distribution should be as follows

--------------------------------------------------------------------------------

--------------------------------2008 Crop----------2009 Crop Estimates (Mts)

--------------------------------------------------------------------------------

U.P/MP-------------------- 85,000 MT ---------- 130,000 MT

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Rajasthan----------------- 90,000 MT---------- 80,000 MT

--------------------------------------------------------------------------------
Gujrat ---------------------- 60,000 MT---------- 60,000 MT

--------------------------------------------------------------------------------
Others--------------------- 10,000 MT---------- 10,000 MT

--------------------------------------------------------------------------------

Total -----------------------245,000 MT---------- 280,00 MT

Last year old crop is almost zero with only limited stocks available due to the bumper Summer crop we had in Gujarat earlier this year. Taking this into account we assume that market should remain stable this year at some lower levels , but this will again all depend on the Chinese demand and African crop which come out in Nov end/Dec this year.

Chinese are said to be having a good crop this year but as a fact we all know they will still need more than they can produce and will certainly buy from cheaper origins whenever possible.

Once again as you know in India things are a little different and we tend to overreact most of the time , ignoring smaller details and reacting in haste. We have already seen some low prices offers going out of India in the last 2 weeks after news of a good crop started to spread around but we still advice the buyers to be patient and not promote speculations as these speculators will then jump to buy in at the very arrival of new crop and give support to prices as they did last year.Which would eventually mean that prices may not actually fall as much as they should in the start of the season and will fall after these buyers cover themselves putting everyone in a bad position.

I'll keep this report short this time and hope to give in more details and numbers by the month end .

Please feel free to ask anymore questions that you may have.We also look forward to seeing you at our booth in Anuga next month.

WE CORDIALLY INVITE YOU TO VISIT US AT ANUGA,COLOGNE. OCT 10th-14th , HALL 1.1 BOOTH F 039a. INDIA PAVILION.

Kind Regards,

Mukul Gupta
C.E.O/Director
Shakumbhri Expo Impo Ltd,
4.5 Km Bhopa Road ,Muzaffarnagar , Uttar Pradesh , India , Pin - 251001.
Ph :- 91 131 2990062,2615164 , Fax:- 91 131 2615165 , Mob:- 91 9837084355
Website :- www.shakumbhri.org
Email :- mukul@shakumbhri.org
Email :- mugupta@hotmail.com
Skype :- mukulgupta78

Latest rainfall map for India, as you can see there is a very uneven rain distribution all over the country and while some would argue that less rains are good for sesame it seems like not just sesame but all other crops will be affected with this unusual rainfall and if less rain are considered as the barometer for a good crop we can safely say goodbye to the Gujrat crop where rainfall is much more than average.

MARKET REPORT SESAME SEED JULY 7TH , 2009

2008 was a rotten year for food prices. Prices climbed so high that very few could eat as well as they might have. 2009 in reverse has been a year of slow but steady consolidation. Prices have dropped but not crashed, food is cheaper again but still not back to the lows seen 2 years ago.

After a very boring season we are finally entering into the exciting time of the year. This is the time when people start throwing in their opinions , numbers for new crop quantity and some even speculative prices for the new season.

Just as we mentioned in our last report the price remains range bound in India with almost a very clear resistance level both on the upside and at the bottom. The volumes have dropped drastically, China and Turkey dont seem to be very active buying but still prices manage to hold firm. The Gujarat Summer crop was said to be 80,000 Mt and considering the daily arrival figures of the past 2 months and current arrival figures it might reach round 65,000-70,000 Mt if not 80,000 Mt. Which is still a very huge quantity for summer crop, but even that did not bring the market down crashing as everyone thought it would.

1:- The Summer crop arrival figures reflect that almost 45-50,000 Mt crop is already out in the market till date.

2:- Out of which we believe about 15,000 was used for the Korean Tender , another 15-20,000 Mt probably for Exports both Natural and Hulled combined.

3:- About 5,000 was consumed domestically.

4:- That means the stocks in our opinion should not be more than 10,000 Mt at most with stockists and Exporters.The Stocks would probably be used up if and when the next Korean Tender is announced or exported elsewhere.U.P/M.P stocks are almost negligible at the moment , I personally would'nt put them more than 1000-2000 Mt and for Rajasthan about 3000-4000 Mt at max.These stocks are spread over so many stockist that they would hardly create a ripple effect in the market even if we start to see some price decline in the coming months.

The current arrivals in Gujarat are down to 100-150 Mt per day and that should continue to serve the day to day requirement of the Hulling factories,domestic consumptions and spot demand for the next 1-2 months.

Now to the interesting part. It finally rained in Delhi/Mumbai this week.

"Delayed monsoons was the big media story only until it didn't rain in Mumbai. Now that it has started raining there, the monsoon story is suddenly over ..... or is it ? We don't grown sesame in Delhi and Mumbai and the news doesn't cover the villages that frantically."Touche :)

Monsoon is late and slow this year and thats a fact.Sesame as we know is a 90 days crop .Traditionally the Gujarat/Maharastra new crop comes out by end of September and other regions i.e U.P/M.P and Rajasthan 2 weeks later i.e by Early October. However this season due the delayed monsoon , Gujarat/Maharastra got their first rains in the last week of june and the sowing started in first week of July and is unlikely to finish before the 3rd week of July and in other regions it has not even commenced fully as yet, at best about 20-23% sowing estimated in some irrigated areas.

This means that the Gujarat new crop is unlikely to come out before first week on October and since Diwali is on 17th Oct this year the farmers traditonally do not get the crop into their market in a frenzy during that week so the arrivals will pick up only around End October. The new crop is unlikely to reach respective destinations before Early November/Mid November and the big question is that do the buyer's have enough stocks to sustain till that long?

All said , we are not very concerned about the 2 weeks delay , that is manageable. The concern is that the rains are still not favorable in most regions. It rained for a few days and the rains are gone again which is definitely not enough for any crop including sesame and the worst is that the Indian Meteorological Department still says that we will have a good monsoon which means that the spread of rains is now concentrated over the next 2 months which is not good news specially for a crop like sesame.

The seeds can do with little rains but if we have a situation like last year when it rained too much at the wrong time we might have a big problem on our hands.The acerage of sesame is bound to go up even this year as the farmers have been getting very good price for their products over the past 3 years and that should be an encouraging fact for them.However last years disaster has prompted a lot of farmers to go in for dual crop , one which requires more water and the other drought resistance to safeguard their interest.

African stocks are heard to be limited as well and should be enough to sustain the Ramadan demand. A few African countries Tanzania, Mozambique will now have new harvest season.China we believe despite their big crop will continue to remain a net importer and Japanese demand which was slow this year due to the very large quantity and long term contracts they entered into last season will expire and they are heard to be running on low inventories as well.

In Ethiopia most inventory is in traders' hand, farmers have a small number of goods. The majority of local traders believe that the total inventory is in 25,000 tons level and some local traders think that the total inventory is 40,000 tons to 45,000 tons. Stocks in Sudan are also not estimated to be very large and with their new crop still 5 months away i.e End Nov/Dec the chances of prices falling there are slim too.

This year high prices in India diverted a lot of quantities and buyers to Africa.Even India is supposed to have imported more than 5000 Mt of African Sesame at lower levels, is this the sigh of things to come. Is India going the china way? We know for a fact now that at high levels demand will suffer from India.

Taking away the demand at higher levels which was evident this season, in the long run will only help sesame because the market will adjust and naturally correct itself. Sesame is a large cash crop in India, we produce about 700,000 Mt annually and export about 30% out of it obviously consuming the rest.Like China the domestic demand is getting bigger and bigger each year along with the exports. And for sesame India is the world’s biggest exporter ,2nd largest producer, 4th largest consumer . Surely, it should learn to stand on its own feet. We have had a large exportable surplus for the last two years because sesame seed production has outpaced our capacity to hull or export.


What will happen if there are less exports? There is every chance local prices will crash due to oversupply, creating misery for farmers. Second, since domestic prices will crash, local crushing mills will have a bonanza. Their raw material would become substantially cheaper with no rival bids from exporters.The cheaper oil then finds its way into the already established edible oil sector for direct or blending purpose. This oversupply problem would, however, only happen for one season. In the next season, farmers will stay away from sesame, they won’t touch a crop for which there are no takers. The oversupply situation would correct itself and once again there would be a balance between demand and supply. The sesame industry will discover it was a phyrric victory.

More broadly, a reduction in India’s crop would reduce the global availability of sesame drastically. Demand for sesame seed internationally would also recover as the world economy gets back on its feet. That would push up world prices, creating an opportunity for Indian exporters once again. In other words, if there is no artificial prop for exports, by 2010 India’s sesame prices would correct itself with new price equilibrium.

The bad news is that 2009 will be tough. There would be plenty of tears, recriminations and guilt. Farmers are planting the 2009 crop on the basis of the fantastic price they got in 2008 from exporters and stockist.They made good sales in the past 2 yrs and are now financially in a better position to bargain a little, they showed that all this season by holding back whenever they thought prices were following.Can they do it again this season?

Its still too early to comment or predict where the prices will be 2-3 months from now.We still hope that India has a good crop, prices reach a balance which is good both
for the consumers and the farmers and we see renewed demand once again.Larger crops mean greater liquidity and depth in the physical as well futures markets, bigger corporate players and more investment in forward and backward linkages. All this to me appears like a definite thumbs up for the commodity markets in India.

Let's say cheers to that and hope that banks actually have the money to lend.

Gujrat has had the driest March/April and there is almost a drought like situation there.

Korean Tender- April 27th , 2009

As most of you would already be aware by now that a Korean Tender for Natural Sesame Seed was announced last week on the 24th.

India got 4800 MT in the range $1343 PMT - $1363 PMT. The balance 1200 Mt was awarded to Pakistan.Once again notable absence of African participation. The prices in Africa as still on the higher levels and with limited stocks there are well they do not seem to be in a hurry to sell cheap, specially when they know the fact that any revival of demand from China or the Ramadan demand has to be catered by them as no other origin is in a position to offer huge quantities.

The tender price is very smartly based on the anticipation of a good summer crop in India , as these levels do not match the current prices in the market we doubt that it was a discounted sale of stocks. The new summer crop arrivals should start to trickle in the first week of May and as the arrival pressure pick up we should see some price corrections. However we don't expect a free fall in prices in May as the initial arrival pressure will be eased with the buying for the Korean Tender which needs to sail out by next month end.

Everyone is now talking about a big summer crop , but as we mentioned in our previous reports the stock situation other than the Summer crop is very small. Everyone is waiting and counting on the summer crop and that optimism should act as a potential barrier in free fall of prices.

Moreover African exporters seem to be in no mood of offering a huge discount anytime soon and that could help keep international price level at sustainable levels.

A few more Korean tender will surely be announced before the Indian new crop in September and that means at

conservative levels about 15,000 Mt ( Including the current tender )from the summer crop will be dedicated to the

Korean tender alone.Which leaves us with about 25-30,000 Mt at max for rest of the worlds supply.However with

current demand at historical lows we still do not see any huge buying rush specially in the summer months.

Its been a boring year , just as we anticipated in our report at the start of season in November.There seems no reason that the next 4-5 months will be any different.However the buyers should be careful as ultimately the end users are consuming , if they are not supplying then probably their competition is.

If price is a deterrent in the sesame consumption , then I am hopeful that people will either learn to live with the high levels or the prices will fall in the coming new season in October. If other substitutes have replaced the use of sesame due to low prices will have lower cushion for a fall compared to sesame and that means at lower levels sesame will not just regain it demand but should also take market share of other substitutes just as they have taken its.

Prices of most food commodities, already up by a fifth in past over a month, are bound to climb as the global economy heads for a recovery. Though the prices of most industrial commodities have fallen on year, prices of food commodities like sugar, edible oil,pulses, fruits prices saw a sharper rise, pinching consumers.

What has been interesting this year is that the market has been very range bound , moving 3 steps forward and

then 2 steps back , the same story should continue in the coming months as well. This should bring stability to the prices and with a narrow band to move in the client confidence should resume and we hope to see some cheer back in the market.

Will be very interesting to see the actual size and impact of the summer crop in the coming few weeks.

USD still remains a major price determining factor as we have noticed in the recent past..

MARKET REPORT - APRIL 2nd , 2009

In continuation to my last report , prices have maintained their lateral movement in the past 2 months since our last reportof end January. Contrary to many people's thought of a market crash we thought that their were certain factors which provided stiff resistance at lower levels.

The prices did go up however do the same factors but the strong USD which traded in the range of about Rs 52.00 = 1USD in comparison to the Oct- Jan average of about Rs 49.00 =1 USD helped make the prices look that much cheaper.The USD in the past 2 weeks has weakened again and is now trading in the range of Rs 50-50.50 =1 USD which again makes the same prices as 2 weeks ago look 3-4 % expensive.

If February a small Korean tender helped move the prices up suddenly even though the bidding prices from India were below everyone's expectation. But once again the absence of competitive prices from Africa which is confirmed to have good big volume crop this year prompted everyone here that there was still scope of absorbing a $100-$200 rise in the international market.

China everyone said will not be buying this year and infact they bought very little since the season started in October,

but as we mentioned in our last report that China may be back for shopping after their major demand period of Chinese New Year got over. The strong buying spree from China in Feb got the prices moving up in Africa as well and after a certain level the demand stopped , clearly showing that the markets this year are very range bound.

Talking to a few of my Chinese colleagues , I learnt that the demand is slow but not down and out in the Sesame Oil business, ofcourse with high prices a certain segment of buyers have switched over but the fact remains that "Nothing is Permanent , not even CHANGE". People switch and then they switch back. A very interesting point as despite this talk of global slowdown and falling commodity prices , the prices of 90% of food items have still not been able to see the lows of late 2007 when this sudden and maddening rise of prices started.

We have all heard of low stocks in India for the last 5 months , low inventory , stocks in the hand of strong stockholders ,stocks at high levels are old topics now. The current buzz word in India nowadays is the Summer crop. I am sure their are all kind of figures already in the market about the size of the summer crop.I've heard estimated ranging from 50,000/Mt to our estimates of about 20,000 MT.

Working of some figures again. Considering that average yield per hectare in Gujarat for Sesame is about 400 Kgs/Hectare that means we need about 2.5 Hectare for 1 Mt of Sesame Seed. For a crop size of 50,000 Mt we would need a total area under cultivation of 2.5 X 50,000 = 125,000 Hectare. This figure looks a little unrealistic as compared to the normal sowing area under production in Gujarat which is about 350,000 Hectare.

Since there have been almost zero rains in Gujarat since Jan 2009 upto March 31st 2009 , some people may argue that summer crop is primarily sown in Irrigated lands with little or no dependence on Rainfall as in the case of normal season crop which is sown in June/July after the first monsoon rains in India.However being situated in a farm area we think we know a little more that people sitting in big cities that such a huge area in India to be cultivated by irrigation is close to impossible and that too for such a high risk and sensitive crop.

In our estimate the crop should be more or less similar in size to previous years with a little sustainable growth pattern and should be the range of 20,000- 25,000 MT. We must also recognize the fact that all of this is not for hulling. This crop will get divided into 3 parts

1:- 99/1 Premium Grade for Natural Export

2:- Hulling Quality

3:- Crushing Grade

Even if we take an average of what other say i.e about 50,000 Mt and our figures of 25,000 Mt , the crop will be around 35,000 Mt.

Lets say the Hulling grade in this is more 50% or about 20,000 Mt . Assuming that only 10 factories(Big small , Auto/Sundry put together ) will run for the next five months from May-September i.e about 150 days.Taking into consideration that the demand is down and there is a major slow down the factories are bound to run at about 60% capacity or lets say they will produce for only 100 days in the next coming 5 months.

10 Factories X 20 Mt Day X 100 Days = 20,000 MT . i.e they will need about 20% more in terms of raw material which means the 10 factories between them will consume about 24,000 Mt.

If less than 10 factories operate out of India , then doesn't that create a situation where the suppliers will have an upper hand in determining the prices and choosing the buyers anyways.If 10 or more factories run even at 60% capacity doesn't that account for this summer crop figure in total.In both cases we see a bottom line resistance being formed.

Where is the spare quantity to pressurize the market to crash? Its not that India needs to finish every last seed before the new crop as a compulsory rule or law.Every year we have carry forward , nothing new if we carry fwd 5-10,000 Mt.

Comparing previous years figures , India generally exports about 80,000 MT in the period April- September , last year i.e April 08- Sep-08 was about 107,000 Mt .Let me know If you need country wise import figures for this period of last 4 years.

Even if this year the April-September figures are down 50 % on low demand , we still would need about 50,000 Mt. We don't see a huge stock situation in India at the moment as even after the price rise in the past month the arrivals did not pick up , some people would say that the stockiest are awaiting for even better prices which may be true in some cases but what is also true is the fact that most stockiest have emptied their warehouse cutting their losses and gearing up for other new crops.After the sudden rise we even saw a 6-7% price correction but even then there was no panic selling by stockiest and no improvement in prices clearly showing that the supply is very very limited.

If all the overseas buyers are running in limited stocks and the demand has been slow over the past 6 months , I think the stockiest in India have been just as smart to realize that fact as well and there is no reason to assume that the stockiest will still hold on to huge stocks and loose their night sleep and money despite getting a chance to exit at breakeven or even at small profits in some cases over the last few weeks.

Some new origins in Africa and Central America will also be coming out with new crop in the coming 2 months but with the strong USD still trading above Rs 50 - 1 USD and at high prices worldwide the import parity and chances of India importing any more raw material is virtually zero. Hulled Sesame from India still remains the cheapest and limited.

Just as we anticipated a Chinese demand after their New year , we anticipate another buying spree from the Middle Eastern Countries and Turkey for their Ramadan demand which falls in August this year much before Indian new crop so all their demand will either be fulfilled by stocks in Africa or Indian Summer crop.

As per our estimates the markets should remain range bound in the next 5-6 months with strong resistance at price of $ 1650 PMT FOB on the lower side and $1850 PMT FOB on the upper side in case of Hulled Sesame. In case of Natural Sesame we see strong resistance at bottom levels of $1400 PMT FOB and $ 1550 PMT FOB.

However the USD still remains a major price determining factor and any downward movement from current highs will only make matters worse.

Sesame Seed Market Report Jan 27th 2009.

As most people would agree it has indeed been a very strange year for Sesame Seeds.2008 started with extreme bullishness and is strangely ended in the exact opposite note.However the troubled world economy and the weak sentiments has a large contribution to this as well.

Since our last report where we mentioned that there might be resistance at lower levels has proved right.We did touch the season's lowest and have bounced back as well. As we have been pointing since the start of the season the USD is playing a very prominent role this year.In Mid November the Rupee was trading at Rs.48- Rs 48.50 to a USD range , by the end of November/Early Dec it once again peaked to Rs 50.40 levels and continues to remain in the band of Rs 48-48.75 ever since.

From the last Korean Tender India bagged a sizeable quantity despite a huge price differential between the Indian and African prices. This clearly imply that price is not always the factor that determines the buying decisions and India should continue to keep that logistical and delivery advantage in future as well.Although it would be unfair on our part to say this but there is still a lot of insecurity and apprehension among a lot of buyers while buying from Africa due to their past record of defaults and quality.

In terms of Indian prospective even though the quantity was less but it still gave some support to the markets at lower levels and clearly implies the situation here.Although it is absolutely impossible to predict the exact crop quantities in India,Africa and China but since everyone in the trade including farmers, traders and exporters have now come to a conclusion that the total crop in India is at best between 200,000 MT to 210,000 MT.

However this year everyone is talking about Africa more than the Indian price's and rightly so.They have the biggest crop and in eventuality of a demand revival will be the only source which can cater to bulk quantities.The prices started coming out of Africa in November. Nigeria,Ethiopia and Sudan all started to quote really competitive prices and that literally confused the entire sesame trading community including the Indian exporters. At one stage the price difference in India and Africa was almost $400/Mt which prompted some Indian companies to look at the option of Importing the seeds from Africa.This situation however did not persist for long as the strong USD and steady price fall in Indian prices ultimately made the imports un-viable.

However there is confirmed news that India has bought about 5000 MT from Africa most of which was to cover their back to back sales.Turkey and China which last year bought huge quantities from India have done so from Africa this year and that is the reason the African prices have moved in a short band of $50-$100 over the past 3 month.

An interesting situation in India is that the Export is down by almost 50% YoY basis.If the USD and ocean freights were still at last years levels the prices would seem 20-25% i.e well above $2000 FOB PMT for Hulled.Why are the prices not falling then?Lets looks at some statistics here ( These are my assumptions based on conversations with friends in trade)

According to our estimates there are about 10 Big Hulling factories(Direct Exporters and Manufactures) in India having

a daily capacity of about 30 Mt/Day and an equal number of smaller factories which produce about 20 Mt/Day,these include the Sun Dry manufacturers and small manufactures who get cater to the trading community.Then there are about 15-20 factories which are very small and cater primarily to the domestic demand in India and operate for 3-4 months only ( Oct-Jan).

The new crop started to trickle in around the last week of September.That gives us about 120 days since the factories have started and for farm level arrivals in the local factories. My rough estimate would be that the factories operated for about 90 days in the past 4 months. That gives us the following.

Num of Factories X Daily Production X Working days since 1st Oct(New Crop) = Total Production

10 Factories X 30Mt/Day X 90 Production Days= 27,000 Mt ( 95 % Exported)

10 Factories X 20Mt/Day X 90 Production Days= 18,000 Mt ( 50 % Exported)

20 Factories X 10Mt/Day X 90 Production Days= 18,000 Mt (100 % Domestic)

Total = 63,000 Mt

To make 63,000 Mt the factories would have consumed an average 20% more Natural i.e about 75,000 MT.

On conservative estimates I would like to believe that there has been a trade of about 50,000 Mt of Natural as well including the Korean Tender supply, domestic consumption of the White 99/1 Grade and crushing quality seeds for Oil used in domestic market.

This almost tallies with the farm arrival figures in the domestic markets.

Avg Gujrat arrival about 5,000 Bags/Day

Avg Rajasthan arrival 10,000 Bags/Day

Avg U.P/M.P arrival 5000 Bags/Day

All India average arrival (all states and local markets put together ) = 20,000 Bags/Day

20,000 bags X 80 Kg/bag X 90 Days of arrival / 1000 =145,000 Mt Arrivals from farmers till date.

Based on estimates that the total crop is about 200,000 Mt it means we have about 60,000 Mt at max which has to come out from farmers or farm levels stockiest to work with for the next 7 months.

I'll assume that the summer crop which comes out in April/May in Gujrat will be about 20,000 Mt but their sowing will

depend on how the prices of Sesame seed are viz a viz Cotton and Groundnut.I think with groundnut that is relatively less Export dependent should also factor in the farmers choice of sowing.

Just as it is an open secret now that most Importers have long term open contracts and very rightly so since they assume that the markets will slide further but they will surely need to cover those at some point, however I would also like to believe that the stocking in India was relatively lesser than last year for 3 reasons

a:-) Prices did not fall to a certain level as anticipated which held back the stockiest

b:-) Farmers got in the merchandise in smaller lots

c:-) Financial crunch

To everyone's surprise the prices in Africa started going up at the same time when prices were falling in India.Other smaller origins such as Uganda,Senegal, Burkina Faso , Mali and Pakistan all have normal crops and their farmers like everywhere else feel a little cheated and are not ready to sell their cargo at low prices.As a trading community we all should understand that sesame is a low yield crop which fetches the farmer less than $400/Hectare ( Avg 400 Kg yield) in normal circumstances , this year it seems at no destination the farmers are willing to sell their cargo below the $1000/Mt benchmark levels.For them ofcourse this is still almost half of the levels they saw last year but

still a fair price for a commodity like sesame and that is the reason the farmers are reluctant to sell at anything lower.

In India the balance of trade remains very sensitively placed.I know that in the past the trading community has many times claimed that we might run out of crop at some stage which ofcourse never happened.This year too I doubt a situation like that is likely , not because we have enough but because the demand is down. Last year as well India barely had enough to cover the demand and the carry over stocks were limited and those too were left as the prices and demand fell at the end. We have time and again visited the farmers , traders and stockiest. The stocks are very limited and everyone by the end of Jan will probably get into a hand to mouth scene here as well. Any sudden demand therefore is likely to create pressure in the market , maybe that will not help in shooting the prices up but will surely be helpful in sustaining a specific price levels. The bullrun of USD against all currencies seems to be over and any fall in the USD against the Rupee will only strengthen the prices here in the long run.

Korea is estimated to still buy about 40,000 MT in the next 8 months on conservative consumption estimated.A portion of this is most likely to be supplied by India and even if this quantity goes to Africa it is more likely to support their price levels there and keep International prices within the current bandwidth.I have heard from my friends and colleagues in Africa that the arrival pressure is not picking up in Africa either. Sudan crop is being consumed quick and fast by Egypt and neighboring countries and is almost as expensive as India.Central American crop is not heard of to be any bigger than last year and with very high prices compared to Africa and India their crop is unlikely to create any sort of pressure in the International market this year. Turkey has still not entered the market but are likely to step in sometime soon as their domestic stocks deplete.China should be back in the market after they do the bulk of their consumption during their New Year Holidays.

If only 10% of Chinese population i.e about 130 Million people each buy/consume just one bottle of 400 ml Sesame seed oil ( 1 Kg Sesame gives about 400 ml Oil ) during these 15 days holidays, how much sesame is consumed?You do the math's :-)

Also not to forget the every Chinese family would make or purchase sesame seed balls of "jin dui" during these days because as per tradition their round shape and golden color it denotes "Luck". I read about this at

http://dessertfirst.typepad.com/dessert_first/2007/02/chinese_year_of.html

Once again in no way are we trying to say that the market could sky rocket but our belief is that it may not crash either contrary to some market sentiments.I would still refrain from jumping in the market suddenly as that could spike up the prices to unsustainable levels which may not hold for long , but would advice slow and steady buying and refrain from speculations and open positions.