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Friday, February 17, 2012

Sesame Seed Korean Tender Feb 2012

This season started with a lot of hope and bullishness. The crop was less, the stocks were low , the buyer’s did not cover long and everyone anticipated fireworks. Fireworks did go up in the local markets here in India but I guess they were not bright enough for the world to see , Mr “ US$ “ decided it was time to bring back some excitement and poor Indian Rupee depreciated by almost 20% in a span of 4 month.

This practically negated any gains the raw material prices had made and prices remained stable and on the lower side. When the crop started we had predicted a resistance @ $1750 levels for Hulled sesame on the lower side and $1900 on the up side. If you exclude the $ factor the prediction has been close enough.

Now to the current situation :-

1:- India got 9000 MT Korean Tender on the 15th of Feb .The deliveries though are spread out upto April and that eases a lot of pressure which could have built up. However the point remains that 9000 Mt will move out of India soon and the sellers will slowly replenish their stocks in the meantime.

2 :- The farmers are hesitant to sell at lower prices & accordingly adjust their arrivals in the markets. We are still to see levels below the opening prices of this season despite very slow demand in the past few weeks. I guess the farmers are holding back strongly this year in anticipation of a bull run like previous years around Mid year when the news for the summer crop arrives. The crop was certainly less than last year as well.

3:- Last few weeks we have seen a price disparity between the Natural Sesame Prices and Hulled Sesame Prices. The Natural Sesame or 99-1 grade prices seem to have moved sideways and remains stagnant while Hulled prices have dropped. This is mainly because most factories did not go long this year and was doing back to back business and as soon as the demand slowed down around Chinese new year Holidays a lot of newer-smaller factories have started to panic. Its perfectly understandable for business entities like them who are new in trade with a lot of Fixed capital borrowing to act in the way that they have. They need turnover to get their books shiny for the bankers. Also in India the financial year ends on 31st march so a lot of these smaller factories need to sell off their stocks to repay the bank credits.

4:- The USD was Rs 44.50 -1 $ in Aug , It moved all the way upto Rs 54.5 -1$ in Jan and has been hovering around the Rs 49 mark for the past few weeks . That’s a movement of 20% upwards and 10% backwards , and its getting volatile with every passing day. Its hard to predict which way it could be heading in the next 4-5 months.

5:- African prices remain more of less stable. Their crop was same as last year and they don’t seem to be in rush to sell cheap either. Like in the past few years they have managed to keep their pricing just around the Indian levels to take advantage of the Duty benefits they get in China and ofcourse Japan continues to prefer their seeds.

6:- What good is a report without some rumors and the latest is that in Gujarat the winter harvesting was delayed a bit due to cold conditions and that the summer crop sowing has not yet started there. Usually it should as being a 90 days crop , mid feb sowing means Mid May Harvesting. Also the farmers seem to be more inclined to groundnut and Guargum this year as they have give better returns. Will wait and see what happens.

All said and done , the market is hanging on its edge I believe , depending on demand the USD it could swing either ways in matter of weeks. In the meantime few suppliers are on “Discount Sale” and I think it’s a good opportunity to shop a little to make a good average for the year. If I have learnt anything from the global crises in the past few years is that people who wait for the Bottom and Peak are the one’s who loose out the most , people who have been working on averages have managed to survive the storm much better.