Sesame Seed Monsoon/New Crop July 16th 2014

Hi Everyone,

Been a long time since I updated the post , actually there was nothing much to write anyways. Everyone had their own idea's of the Market and without numbers in hand it made little sense to counter the predictions/Guesstimates and view of the market.

Lets first look at some of the things that have happened in the past few months.

1:- Summer crop in Gujrat came out and although everyone put out numbers in excess of 150,000 MT , the official survey reports pegged it at around 115,000 MT.

2:-  The hulling industry saw the birth of another quality this year from Double Skin Bengal Brown Sesame seed. I had my apprihensions about the quality and I continue to do so. Thankfully people are now atleast offering it a different grade altogether so that buyer's now have a choice weather to buy cheap chemical laden product or opt for the Premium Product. The price difference is almost $200-$300 PMT so you need to be careful what you buy and from whom you buy.

If you buy the cheaper grade at cheaper quality knowingly its perfectly fine and a personal decision but incase someone sends you the cheaper quality at a slightly discounted price compared to the Premium it means instead of saving $100 PMT you probably lost $200 and now you work with the risk of selling substandard quality to your premium grade buyer's.

The Brown Sesame Grade is here to stay so everyone needs to be extra careful from now on.

3:- The stock levels as rightly predicted have touched a all time low , Stocks in the states of UP, MP and Rajasthan have almost finished. Atleast for UP and MP I can predict with utmost confidence that they might not have more than 5000 MT put together and even this is a exaggerated number.
I wouldn't be wrong in saying that the only reason buyer's have been able to buy from India and India has been able to export Sesame is because of Gujrat Summer crop from Mid May onwards.


Now to some numbers

1:- Gujarat Summer Crop :-
Arrivals started around 15th May,Peak arrivals around 25th May and Dipped again around 25th June. Peak Arrivals average around 25,000 Bags/Day or about 2000 MT/Day.
Slow Arrival Average around   8,000 Bags/Day or about   600 MT/Day
      Peak Arrival Days :- 30 , Slow Arrival Days :- 30

Total Quantity = (30 X 2000MT) + (30 X 600MT) = 78,000 MT. This number might still be off by 10% so lets assume we've had a crop close to 90,000. Even though I never put a number our regular clients will know that we never estimated the crop to be above 100,000 Mt .

Some people might argue there were days with 35,000 Bags/Day arrival as well , so to factor in the odd days I have taken a average without considering the holidays or carry over sales of the day.

2:- Indian Sesame Seed Export Import Data for the past 2 years
Export

S.No.	HSCode	Commodity	Unit	2012-2013	2013-2014	%Growth
1.	120740	SEASAMUM SEEDS	MT	299,482.29	257,443.09	-14.04

S.No.	HSCode	Commodity	Unit	2010-2011	2011-2012	%Growth
2 .	120740	SEASAMUM SEEDS	MT	398,441.17	389,154.01	-2.33

Import

S.No.	HSCode	Commodity	Unit	2012-2013	2013-2014	%Growth
1.	120740	SEASAMUM SEEDS	MT	38,050.45	72,928.09	91.66

S.No.	HSCode	Commodity	Unit	2010-2011	2011-2012	%Growth
2	120740	SEASAMUM SEEDS	MT	8,727.92	609.28	-93.02

Interesting number's these. You will notice in the past 4 years the Exports from India have dipped by almost 140,000 MT but the Imports have risen by almost 70,000 MT.

India cannot import Sesame for domestic consumption so all that we are importing we are re-exporting.
Its a similar pattern to what China had till it became a net Importer. The domestic consumption in India is rising and the buyer's here are willing to pay a better price as well with less headache and faster payment terms. The African markets have opened up for everyone in the trade and India I believe is one of the biggest buyer from Africa now , weather they import the seeds into India or get them exported directly to various destinations is another story.


Current Situation and Future Predictions :-

1 :- Anyone thinking that the stockiest in India are sitting on huge loads of stocks in their warehouses is in for a big shock in the coming months. The stock situation is at a all time low in every sesame producing area and whatever little there is left should only be enough for India to sustain its export demand for the next 3 month until the new crop arrives.

2:- The monsoon is really weak in India and with almost 40% less rainfall the situation looks unlikely that it will improve. The late rains means that sowing in most areas has not even started now.
Going by the data available online

 "In oilseeds in particular, there has been 83 per cent drop as of last week July vis-a-vis July last year in terms of the area under sowing. "

"Sowing of most kharif crops barring paddy is significantly lower than the corresponding area last year. According to agriculture ministry data, a total of 25.6 million hectare area has been down as on July 12, half of the corresponding area of 51.76 million hectare sown in the corresponding period last year. Most affected is the sowing of crops like pulses, coarse cereals, oilseeds and cotton"

 "As on July 15, cotton sowing is done on 10.19 lakh hectares against normal of 27.17 lakh hectares, while groundnut sowing is 5.41 lakh hectares against normal 14.39 lakh hectares in the state. Total area under cultivation in the state is 11.25 lakh hectares as against the normal 26 lakh hectares."

"It would be a blind bet for the cash crops because rains are uncertain and the crop may fail. In this situation at least the farmers have to save their cattle by making adequate fodder available.The present rainfall is insufficient for sowing of cash crops because it would require more moisture in the soil. But with such rains, fodder is an option for farmers to survive their cattle"

Even if we assume that these estimates are wrong we can safely say that the sowing will be short and even if the rains come today and sowing starts tomm , which i don't think will happen anyways looking at the rainfall situation the sowing area is unlikely to be anywhere near what it was in the previous years. Even if the sowing finish by End July , the new crop will not be available before November now and that means for the next 3 months India will absolutely finish every last kilo of Sesame stock and might go into African markets aggressively to shop around , taking the global prices higher and higher till they can be cooled down by the new crop.

3:- The new crop predictions should start as usual in September-Early October and any bad news can create further panic , we also have to keep in mind that even that little new crop will be on the mercy of the rains , we have seen in the past few years what damage the last few weeks of rains can do to sesame seed crops.

4:- The festival season and Winter demand for the domestic markets in India should also start around Mid October and with no new crop in sight the old stocks will quickly be diverted to the domestic market where they fetch a better price. 

5:- I am not implying in anyway that the buyers need to stock their warehouses today in anticipation of price rise , there still are many factors which can cool down price

a:- Good crop in China and Myanmar , this will divert all the Chinese and to an extent the South Asian 

     Oil based demand.

b:- Drop in demand , again I say demand and not consumption. If on the shelf it will sell.

c:- A huge crop in India in a range of 250,000 -300,000 Mt.

d:- A normal to huge crop in Africa

e:- Currency factor is always there

Looking at all the factors above we believe there might be another bullish year ahead , atleast till December when African markets will once again determine the fate of prices for the next few months.
However with global prices available to everyone on real time basis atleast "WE" would not be naive enough to think that Africans would sell their cargo at throw away prices when they know for sure that no one else can fill in the global supply gap. With carry over stocks worldwide at all time low chances are we would continue to move hand to mouth basis for the next season as well.

Looking at the global scenario my suggestion once again to the buyer's who like to do business on a long term basis is to get into collaborations with actual Manufacturer Exporters rather than relying on fly by the night new suppliers and brokers. You might get lucky with small trader's once or twice but for a larger picture you do not even realize that slowly you are getting sidelined in the business and someone else is taking up that space. The only way to move forward in this global economy is to have a stable and reliable supplier base.

Switching to inferior quality in tough times might look like the best option initially but by the time the world spins around again you would find yourself on the wrong planet altogether.

Tough choice but thats what life is all about.

Sesame Seed Gujrat Summer Crop Prediction

Hi Everyone,

Since our last report in Jan the markets have been more or less rangebound as we thought they would.

Nothing much happening in the market except the gossips and predictions of a super Summer Crop in Gujrat . It seems like everyone expects the seeds to pour out of the farms onto the streets and a total crash in prices . We'll to be frank we don't really see that happening.

Lets look at a few reasons why we think so.

1:- The stocks in India are at really really low levels , its a fact I doubt anyone would deny now.

2:- Stocks at destinations are at a hand to mouth situation as well , I doubt there are buyers sitting on huge unsold stocks anywhere in the world.

3:- African cargo is practically over and they will not harvest till Early November in a big way.

4:- A new crop or a big new crop is not a unknown phenomenon . We have a new crop every year in every sesame growing region. Its much bigger in size than what we expect the summer crop to be and still prices do not fall let alone crash every time. Ofcourse a  new crop can start with a correction of 10-15% but how long that correction stays depends on so many factors which need to be looked at.

5:- With predictions numbers of 100,000-150,000 and even 200,000 coming out for summer crop I think most people have now forgotten what the average summer crop size actually is. So now even if we have a crop of say 80,000 MT everyone in the market will say its a small crop because the comparison parameters have been set to artificially high levels.

6:- While I was in Gulfood talking to a few friends everyone there predicted a super crop for chickpeas as well and within 3 weeks time the rains have practically turned the tables. Didn't the same happen to the sesame crop's in India over the past few seasons.

7:- Everyone says farmers would grow more sesame because the prices are high , but fail to acknowledge the fact that sesame is a low yield crop as well. So a farmer growing sesame today doesn't really make a killing compared to the other crops he can do as well. However going by the same logic the question remains that will the farmer who has seen his crops getting washed out for the past 2 seasons and lived in misery will dare to do sesame seed again if the Indian government predicts another good monsoon.The fact is that a good monsoon in India means that you can have a good crop of practically any commodity except Sesame.

Here are a few articles for you to go through to understand that with the unpredictable world weather how difficult it really is to predict a good or bad crop even after its been sown , let alone predicting a crop size even before the sowing started. Still have a good 2 months before new summer crop arrives and will be interesting to see how many Astrologer's who predicted a bumper crop revise their estimates in the meantime and get their clients into deeper troubles.

http://timesofindia.indiatimes.com/city/rajkot/No-respite-from-rain-hailstorm-in-Saurashtra/articleshow/31773484.cms

http://timesofindia.indiatimes.com/business/india-business/Fears-of-El-Nino-on-rise-may-spell-woes-for-the-economy/articleshow/31824485.cms

http://www.hindustantimes.com/india-news/storms-batter-half-of-india-damage-farms-and-crops/article1-1193410.aspx

The USD has started playing games as well just like we expected it to in Election Year. The USD has moved to 60.80 levels from nearly 63 levels a few months ago which is like a 3-4% appritiation.

Market Report Sesame Seed 20th Jan 2014

Hello Everyone,

Hope everyone had a great start to the New Year and we wish everyone a lot of Happiness , Joy and Prosperity.

Sesame Seed market over the past few months since our last report has moved along just as we predicted. The Hulled Sesame Seed Price jumped to an all time high of around $3200-3250 FOB levels and have since then settled down at around $2850-$2900 FOB levels.

What has indeed happened is the arrival of sub-standard qualities in the market which are trading at much lower levels but frankly speaking I personally wouldn't recommend anyone to eat that. In my 14 yrs in business its very rare that I have ever tried to ridicule or snub a competitor , what others do is none of my concern but when it comes to Sesame Seed laced with Chemical's , bleach and various whitening agents I think its my duty to make people at least aware about it. I never understood this fascination of pearly white color in the seeds anyways.

The cheaper variety or "Hulled Sesame Seed from Brown" as they call it, is being made from crushing grade Brown sesame ,just the brown/black/Red etc mix kinds was still acceptable but this year they are trying to hull the double skinned sesame , mainly found in West Bengal region of India, the worse kinds that is available, even the oil made from these seeds is considered lower grade and for direct consumption its almost as good as slow poison. As of now the food authorities around the world are not checking for chemical adulteration in Hulled Sesame but I am sure some day they will and then a lot of people will loose a lot of money in claims and God forbid will land up in jails for mis-declarations.

You can ask your respective suppliers more about it , just ask which raw material is being used for the Hulled that they are supplying to you and for once just ask them if its chemical and bleach free,  you will be surprised how quickly the price offered will change. Its a dirty game being played in India so just be careful. I can understand if the price difference is 50-60$ PMT for a Hulled Sesame Quality , but a difference of $200-$300 raises suspicion. Something has to be wrong somewhere.

Moving onto better things , the Sesame Market overall.

Current Situation :-

1:- The markets are almost stable on a day to day basis over the past few weeks now. The arrivals have virtually stopped and the demand remains sluggish with mostly spot business being done.

2:- The stocks are definitely not huge , contrary to what many people think that there really is a lot of stocks hidden somewhere and one day the flood gates will open and all the sellers will come out with truck loads and markets will crash 20-30% overnight. I really doubt that. Being a manufacturer I have never really seen a situation as we see now. To buy 100 Mt a day in Jan is a big deal today , whereas in past we could collect a 1000 mt over the phone.

3:- The Korean's tried to play smart and announced a tender excluding their traditional suppliers ie. India, Pakistan , Sudan and Ethiopia. They thought the smaller countries should be brought into the picture to expand the supplier base , it did work but surely not the way they probably thought it would, the prices they got around $2550-$2600 was not really a huge bargain.

4:- Africa was the only reason we believed that could have brought the prices down, it did to a certain extent but once again our predictions from the past held true. Sesame is no longer a sub $2000 commodity. Unless something really drastic happens i doubt the Natural 99/1 grade can trade below $2000 levels this season i.e till next new crop in Oct 2014.

5:- Talking about the dip in demand and exports , a lot you will be surprised to know that the export numbers from India from Oct- Dec are only marginally down. If I have the correct numbers the total export from India for Oct-Dec stands at around 53,000 MT . That is rougly about 18,000 Mt per month.

6:- The sudden correction in prices have forced virtually everyone to get rid of the excess stocks. The exporters , bigger stockiest have all gone into profit booking mode since mid Dec and I believe by mid of Feb we should once again see hand to mouth buying from everyone. Even with so little buying by exporters and bigger stockiest the prices at farm/market levels remain firm and high showing that there really is lack of supply and bullish under current.

7:- People talked about heavy imports from Africa into India , but fail to realize that unlike last year the average Import prices are around 2000-2100 $ PMT . Average cost to bring the imported cargo to the factory is around $100 PMT . So with a landed price of  $2100 PMT and taking a good yield of say 80% we get $2625 just the cost of seeds. You need to add the manufacturing cost + packing + export charges + interest cost etc, all of which will cost nothing less than $200 PMT. So the mean average that we predicted in the start of the season around 2800-2850 stands justified.

Unless someone can point out where the raw material is cheaper than $2000 PMT on a consistent supply basis  , I see no reason for a huge slump in prices in India.

What can happen over the next few months :-

1:-  News of smaller new crops ( Mid Season) are coming in from Gujrat. I think these are the one's where the farmers did resowing after the late damages. I would put these to be in the range of around 2000Mt to 3000 MT on time to time basis. People say these could pull the markets down but I believe they are more likely to keep the market steady.

2:- Gujrat summer crop. Phewww  some people are already talking about summer crop being huge , bumper , ultra super in the range of  100,000 Mt.  Well all I can say to such rumors is good luck Mr Nostradamus . Last time Gujrat produced a 100,000 Mt was a decade ago and even that was a regular crop. The sowing has not started yet , we don't know what the weather is likely to be in the coming months so predicting a crop size just on the basis of high prices right now is like predicting floods after a thunderstorm. Yes it might rain cats and dogs , but then maybe it just drizzles , who knows :). The crop comes out around Mid May-June so we still have time , the sowing will start end Feb-Early march and hopefully we should start getting some size estimates by Mid April.

3:- Korean Tenders will continue to come in from time to time and will keep determining the bench mark prices across the world. Tenders are likely to be smaller in lot size as we have noticed from the past few tenders but i believe the overall quantity on a yearly basis should be same.

4:- If the prices from Africa and India remain stable i foresee a renewed demand coming back as i have a feeling the buyer's have almost got used to or comfortable at current levels and there is no need to panic anymore.

No big crops expected globally for the next 6-7 months , the next big crop will be China in September and till then it will be bits and pieces crops in various african destinations which certains cannot cater to every market segment on a regular basis.

Overall our predictions for the next few months atleast till the next summer crop arrives is that market would remain firm and rangebound. At higher levels the buyer's will slow down and at lower levels there will not be enough sellers. So once again for Hulled a Range for $2800-$2900 remains a good and safe bet to be active in the market.

We also need to watch the US$ carefully , thankfully for the past 3 months it has been stable and moving in the range of 2-3% both ways but with Elections in India just around the corner ( Expected to happen in April-May) the economic situation could turn either ways and from the little information that we've got it can get very volatile during that period.

For people who were worried about the consumption drop in Sesame seed , I found a few interesting articles on the Internet about the growth on hummus ( its 50% Sesame Paste i.e Tahina) . 

http://www.theguardian.com/lifeandstyle/shortcuts/2013/aug/07/british-love-affair-with-hummus

http://www.huffingtonpost.com/2013/05/02/hummus-is-conquering-amer_n_3202411.html

http://en.wikipedia.org/wiki/Halva