Hello Everyone,
"All said and done , the market is hanging on its edge I believe" . If you read my last report you would remember these words :)
What an amazing turnaround it has been for sesame seed in the past few weeks. The sellers were literally on their knees begging the customers to buy something and no one was stepping in. The 5% duty rebate was taken away and the markets still did not push forward and that I think was very surprising indeed.
So the question now is WHY and HOW and more importantly WHAT NOW. Once again i wish i knew. But lets work on some points to understand the WHY first.
WHY and HOW
1:- The bullish feeling as we all know started at the start of the season. Stocks were low but so was the demand.
The demand came slow and steady and that helped keep the market range bound for most part of the season. The carry forward stocks were good too and stockiest gave up on the market and diluted their excess stocks , barring some rigid and financially strong players. By the time we finished the Oct crop , the Summer crop stepped in and eased the pressure that had just started to build up. However with 2 big back to back Korean Tenders ( Almost 24,000 MT ) that's like half the summer crop sold the pressure lid was off.
2:- After April everyone was going slow in the market. The buyers were going hand to mouth and so were the sellers , it was the logical thing to do looking at the global demand situation but how wrong were we all.
3:- With Mr Dollar acting strong no one realized that even though the prices in USD terms looked stable and range bound they were actully heating up in Rupee terms from the farmer and stockiest point of view. Everyone failed to judge the undercurrent that was starting to build up.
4:- Delayed and irritate monsoon. Its the same story every year and sometimes we are right sometimes wrong but it does have a very important market impact.Its crazy to judge the volume and size of the crop right now but the fact remains that with late rains the sowing is late and that means the crop will be delayed. Even if we assume all sowing finished by July 15th , 90 days crop means crop will not be harvested before Mid Oct and available to exporters and factory by end of Oct for shipments. That means the first new crop containers will not reach the destinations before End November.
5:- Commodity bullishness in other commodities. Since most of you deal in multiple commodities you would know nothing is cheap at the moment so what should sesame remain at the bottom of the chart. Rumours of crop shifting by farmers may or may not be true but if you were a farmer and you had the option to grow anything out of Guar( All time high prices and still strong demand) , Groundnut , Cotton , Soya and Lentils what would you choose .Im sure some if not many will change their loyalties to sesame seed.
Now that we've see a few Why's and How's , lets change to
WHAT NOW
1:- Indian's as most would say have played the Bluff card time and again in the past , maybe this is just another one. Maybe you're right , but what if you are wrong. We've all seen what happened in the past and there is no reason why it cannot happen again.
2:- Stocks are definitely low , no doubt about that and this I'm not stating from a general prospective but hard facts being in the middle of the action. Part of the reason could be that stockiest and sellers are getting greedy and do not want to sell in anticipation of higher margins but also because they have very little in hand to sell.
Who doesn't like profits, if you have 10 apple in hand you sell 2-3 at a certain price and make profit and then wait for the next rally , then you repeat the process right ,basic rule of Business. But what if you only have 2-3 in hand , you wait and wait to get as close to the peak as you can. Thats exactly whats happening in India right now.
3:- Best case scenario : Demand stops , market stabilizes , new crop is good , prices are revised 10-15% as they always do and the next season prices remain rangebound.
Worst case scenario : Panic demand comes in , Stockist hold back creating artificial shortage , Prices rally to staggering highs , New crop is bad , everyone rush in to cover the first seed available and the vicious cycle continues for the rest of the season.
Ofcourse the best and worst care scenario would depend which side of the fence are you on.
Another interesting observation, Every commodity as we know moves in cycles , its a proven fact and remains valid for everything from gold, silver , oil , food everything. Sesame seed if you all remember had a benchmark price of about $500-$600 way back in 2001-2002 . Then some factors pushed it up to about $1100-1200 and finally the benchmark for the next few yr 2005-2006 was set to around $1000-$1100 range. The cycle repeated itself and prices rushed unto staggering highs and after correction the benchmark for the past few yrs was set at around $1500-$1600 range.
My assumption is that its time for another benchmark correction jump. I don't know what high's the prices can reach in months to come but i do know that in the coming years the bench mark will be revised to around $2000-$2100 range. Its a necessary evil and over a period of time we all learn to live with it , if these benchmark prices were not revised periodically the commodity would lag behind and die slowly as the farmers would fall behind in the inflationary numbers.
Another thing is the growing consumption , I personally feel that consumption world wide is growing slowly for everything and that includes sesame seed (oil form mostly i think) , although the growth of 3-4% annually may not suddenly reflect in the prices each year these growth numbers do add up over a period of time and make the reset benchmark prices even more logical.
Like I said a few year back , this year its time to renew old bonds and search out your trusted suppliers , it could be a rough ride ahead. My father always tells me " If you don't have a good supplier , no matter how good a salesman you are you will never make money"
Once again it would be nice to have your comment and suggestions.
Attahed is the Rainfall data unto last week from govt sources, you can see most sesame sowing areas are way too dry for full fledge sowing.
"All said and done , the market is hanging on its edge I believe" . If you read my last report you would remember these words :)
What an amazing turnaround it has been for sesame seed in the past few weeks. The sellers were literally on their knees begging the customers to buy something and no one was stepping in. The 5% duty rebate was taken away and the markets still did not push forward and that I think was very surprising indeed.
So the question now is WHY and HOW and more importantly WHAT NOW. Once again i wish i knew. But lets work on some points to understand the WHY first.
WHY and HOW
1:- The bullish feeling as we all know started at the start of the season. Stocks were low but so was the demand.
The demand came slow and steady and that helped keep the market range bound for most part of the season. The carry forward stocks were good too and stockiest gave up on the market and diluted their excess stocks , barring some rigid and financially strong players. By the time we finished the Oct crop , the Summer crop stepped in and eased the pressure that had just started to build up. However with 2 big back to back Korean Tenders ( Almost 24,000 MT ) that's like half the summer crop sold the pressure lid was off.
2:- After April everyone was going slow in the market. The buyers were going hand to mouth and so were the sellers , it was the logical thing to do looking at the global demand situation but how wrong were we all.
3:- With Mr Dollar acting strong no one realized that even though the prices in USD terms looked stable and range bound they were actully heating up in Rupee terms from the farmer and stockiest point of view. Everyone failed to judge the undercurrent that was starting to build up.
4:- Delayed and irritate monsoon. Its the same story every year and sometimes we are right sometimes wrong but it does have a very important market impact.Its crazy to judge the volume and size of the crop right now but the fact remains that with late rains the sowing is late and that means the crop will be delayed. Even if we assume all sowing finished by July 15th , 90 days crop means crop will not be harvested before Mid Oct and available to exporters and factory by end of Oct for shipments. That means the first new crop containers will not reach the destinations before End November.
5:- Commodity bullishness in other commodities. Since most of you deal in multiple commodities you would know nothing is cheap at the moment so what should sesame remain at the bottom of the chart. Rumours of crop shifting by farmers may or may not be true but if you were a farmer and you had the option to grow anything out of Guar( All time high prices and still strong demand) , Groundnut , Cotton , Soya and Lentils what would you choose .Im sure some if not many will change their loyalties to sesame seed.
Now that we've see a few Why's and How's , lets change to
WHAT NOW
1:- Indian's as most would say have played the Bluff card time and again in the past , maybe this is just another one. Maybe you're right , but what if you are wrong. We've all seen what happened in the past and there is no reason why it cannot happen again.
2:- Stocks are definitely low , no doubt about that and this I'm not stating from a general prospective but hard facts being in the middle of the action. Part of the reason could be that stockiest and sellers are getting greedy and do not want to sell in anticipation of higher margins but also because they have very little in hand to sell.
Who doesn't like profits, if you have 10 apple in hand you sell 2-3 at a certain price and make profit and then wait for the next rally , then you repeat the process right ,basic rule of Business. But what if you only have 2-3 in hand , you wait and wait to get as close to the peak as you can. Thats exactly whats happening in India right now.
3:- Best case scenario : Demand stops , market stabilizes , new crop is good , prices are revised 10-15% as they always do and the next season prices remain rangebound.
Worst case scenario : Panic demand comes in , Stockist hold back creating artificial shortage , Prices rally to staggering highs , New crop is bad , everyone rush in to cover the first seed available and the vicious cycle continues for the rest of the season.
Ofcourse the best and worst care scenario would depend which side of the fence are you on.
Another interesting observation, Every commodity as we know moves in cycles , its a proven fact and remains valid for everything from gold, silver , oil , food everything. Sesame seed if you all remember had a benchmark price of about $500-$600 way back in 2001-2002 . Then some factors pushed it up to about $1100-1200 and finally the benchmark for the next few yr 2005-2006 was set to around $1000-$1100 range. The cycle repeated itself and prices rushed unto staggering highs and after correction the benchmark for the past few yrs was set at around $1500-$1600 range.
My assumption is that its time for another benchmark correction jump. I don't know what high's the prices can reach in months to come but i do know that in the coming years the bench mark will be revised to around $2000-$2100 range. Its a necessary evil and over a period of time we all learn to live with it , if these benchmark prices were not revised periodically the commodity would lag behind and die slowly as the farmers would fall behind in the inflationary numbers.
Another thing is the growing consumption , I personally feel that consumption world wide is growing slowly for everything and that includes sesame seed (oil form mostly i think) , although the growth of 3-4% annually may not suddenly reflect in the prices each year these growth numbers do add up over a period of time and make the reset benchmark prices even more logical.
Like I said a few year back , this year its time to renew old bonds and search out your trusted suppliers , it could be a rough ride ahead. My father always tells me " If you don't have a good supplier , no matter how good a salesman you are you will never make money"
Once again it would be nice to have your comment and suggestions.
7 comments:
Good report. Very interesting. Thank you.
Nice report and I hope you will report continue about the market Please.
asparagus with sesame seeds
Very nice report shared.thanks for the post.find global market reports
Global Market Report
Industry Forecast
Thanks, for sharing the seeds market report . Stock were low but so was the the demand in their market. The demand came stable but very slowly and that served keep the industry range limited for most part of the season. Definitely, the intake globally is growing slowly for everything and that contains sesame seeds.
Nice reporting, but you miss Myanmar production.sesame seeds
New report please
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