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Monday, September 25, 2017

Sesame Seed Market Report Sept 2017

Good Day Everyone,

Its nice to be back on my blog after a long long time , for all those who are wondering why I was absent , I think I owe them a brief explanation , well firstly there wasn't much to write about in a lack luster season and secondly the Health problems of my beloved Uncle, my mentor, my Business Partner who passed after a long struggle this May. Being in a family run business these things can hit you hard, more than any one can possibly imagine.

Well but life goes on and here I am back again Hail and Hearty ready for the journey ahead.

About Sesame now , what can i possible share that all of you already do not know. Hmm..let me start with some numbers.

World Sesame Production is now close to 4.8 Million MT , yes that 5000 Times 1000 ,
The Top 10 producers would be ( In descending  order of production )
3:- China
4:- Tanzania
5:- Sudan
6:- Ethiopia
7:- Nigeria
8:- Burkina Faso
10:- Niger.

The Largest of these would be India if I am not wrong producing about 700,000 MT in Total ( All Varieties and 2 Seasons) and Niger should be close to about 100,000 MT. The top 10 would easily be about 75-80% of the worlds total production.

Well where does all this sesame go then, Let's see. About 2 Million MT is being Exported/Imported,weather we take a Total of the top Importers or a Total of the Top Exporters
 it doesn't matter.
The Top 10 Importers would be
1:- China
2:- Japan
3:- Turkey
4:- South Korea
5:- Vietnam
6:- Israel
7:- Taiwan
8:- USA
9:- Syria/Lebanon/Iran/Iraq
10:- Saudi Arabia

The Largest of these i.e China is Importing close to 1 Million MT alone , Japan and Turkey are at 150, 000 MT and Korea Vietnam around 100,000MT . Thats a total of  about 1.5 Million MT in the top 5 Importers alone. The rest of the world is way way way behind at 500,000 MT in total.

Staggering figures , however these still leave about 2.8  Million MT unaccounted for , whats happening to that quantity? Well i would like to believe that is being consumed locally in the producing area's and also a substantial amount is being exported to Neighbouring countries through border trade like in the case of Myanmar- China or Sudan-Egypt Trade which justifies why those numbers do not show up in the Export numbers. India is exporting about 300,000MT but also consuming as Edible oil and Seed about 400,000 Mt locally.

While all these years we talked about Sesame on Hamburger buns , breads and Tahina , Sesame Oil has raced away quitely.

In any case the basic point remains that China is miles ahead of everyone else in its capacity to buy and consume and I think its still not the end of the road. I was in China recently and the general sense I got there was the Chinese are least concerned about the size of their own crop now and are Happy to buy from Africa.As we know the Sesame trade from Africa to China is more than just a commodity Business , it is deeply connected to the Forex exchange and the Import needs of Africa ,which are surely on the rise with each passing day.

Now to Indian Crop. After a lot of speculations , guess work , manipulations , survey's , statistics ,the trade I think has finally reached a consensous , India will harvest a good crop finally. The numbers will vary but a safe figure would be around 350,000 Mt ( All States combined ). Not a huge crop by any standards but keeping in mind the above stats its more than enough for India. We are still exporting close to 300,000 Mt and the current new crop should be good enough for that. We've had some rains in the past few days which might not have damaged any quantity but have surely delayed the harvest by about a week or so , if all goes well the harvesting will start in a few days time and we expect good arrivals around Mid October and then with a Diwali holiday gap to pick up by End October/Early November again.

Like I mentioned in one of my reports , India is a almost a Importing country now, for the past 2-3 years we have been more worried about where to source the cheapest raw material in volumes from rather than worry about where to sell those volumes , its a huge market for the Africans and in a weird tangle of being a supplier as well as competitor they are playing the game really smartly. India in the past 4-5 years is being beaten at its own game and with almost 70% of the Natural Sesame Export share already gone we have little to play with. The Korean tender is the last fortress standing for Natural Exports and with African & China eyeing that as well its only a matter of time that it will fall too.

So what will be the driving factors in the months to come, they remain the same as last year i guess with a few additions. In my last years report I mentioned as follows

We believe for a bullish market the bulls really need to get all their fundamental's right
1:- Low Carry over's
2:- Less new crop
3:- A steady and healthy export demand
4:- A steady and healthy domestic demand
5:- Good access to a lot of funds to hold onto stocks for longer period
6:- Low global availability of the cargo

While for the bearish market the Bears only need to get one of the above 5 right and the market either falls or stays put.

Well the bears did get that one thing Right and that was Carry Over's, no one expected that India and the rest of the world would be sitting on such huge stockpiles , the cargo just kept coming and coming and coming. Point 5 came in from time to time as well which held back any rallies that happened.

This year Point 5 i.e Access to Funds would be a major point at least for India and a 7th Factor which I would like to add would be Supply/Purchase timing. The Chinese are not so erratic in their purchase as they were a few years ago , like any smart and big businessmen they have adapted , they know the exact dates of availability of crop from every major country. They have the volumes behind their back , they know eventually they can dictate the markets the way they want it and its showing.

Yes of course their will be up's and down's , there will be times of high demand and slow patient waiting but at the end of the Day the one with volumes will make do. Once you have the capacity to move volumes you automatically can average that much faster and work on lower margins.

Where a Big European company would have an annual volume of 1000 Mt/Year the smallest of Chinese Importer can book that much quantity in a day and move the volumes in matter of weeks.

Silver lining at the end of all the story is Hulled Sesame Seed still remain the forte of India. We have the expertise , we have the capacity and we have the resources. Unless China suddenly removes the duty barriers and start duty free Imports from India , in which case they would take everything we produce , we are all happy to serve the world with our Hulled Sesame.

India has for long played the "Elite Bar" game , where the waiter tells you " Last Order Sir" and you panic and order more than you really need just because you don't want to end up short ,the African's quietly and smartly have opened a 24 Hr after party place where anyone and everyone is welcomed at any given time. There is no reason why the Elite Bar's cannot survive , it surely will but some things need to be corrected.

The Hulled Sesame buyer's sooner or later need to understand that they control the Indian markets now, we have no where else to go , its the bitter truth atleast for the time being. So if YOU don't Panic WE don't Panic. Cargo is available all throughout the year and when someone tries to manipulate the markets with 10-20-30 FCL's 500-1000 Mt go back up to the 4th paragraph and read the global numbers. How long can one do it, How long can one sustain a Rally or a trigger a drop ,now that Big corporates are invested with Millions of dollars into this trade.

In the recent past the buyer's split their business to smaller players , anyone who wanted to buy 2 FCL's was sending Inquiries to 10 people and waiting for the best offer to choose from , little did they realize that India is a very open market , the 2 FCL inquiry multiplies to 20 and gets blown to 40 so if you only have one purchase per year it would make sense to do it but as a regular you have just triggered the market for your next purchase. What you saved in the first purchase is all but gone by the time you come in again to buy the next one. A quite controlled purchase from limited people would any day be a better option.

Just like in Poker for a Flush and Straight sometimes you need to see the River card and not act anxious, the other guy might just be holding a pair at best , yes you make loose sometimes but whenever you win ,you win Big. Choice is yours if you want to play against 5 opponents or narrow it down to a 1 on 1.

When most of India's trade is based on " I think " &" I have a feeling" the big boys in Africa and China are playing by " I Know " & " I am sure " rules.

African Sesame is under EU watch and 50% of the cargo's being imported will be checked which means heavy delays and costs for the Importers. To start their pricing may win but when the panic will set it for timely supply I assure you the only option to fall back on is India. The overheads in Imports and the costs people will pay for delayed supply will start reflecting in the books soon enough.

On a personal note I doubt prices will fall to the lows it touched this season , the reason being a lot of carry over stocks have emptied out and that has eased the pressure , a bullish run could also happen due to this factor but now since Africa is always on Indian stockiest mind it could well fizz away just as quickly. A slow steady increase is more likely to sustain than a sudden rally. My conclusion would be that most bearish reasons have already be factored into the current levels apart from the New Crop Arrival pressure. Current levels are a good buy and going ahead expect a slow steady rise ,right upto last season's top levels at best. So the benchmarks would be 10% above last seasons low's and 5% above last seasons High's.

I look forward to the pleasure of meeting you at Anuga and serving you this coming season. Please feel free to ask for anything that you need and I shall try my best to serve.

We welcome you to visit us at the Anuga Food Show
Mukul Gupta ( Director)
Shakumbhri Expo Impo Ltd
Tel   :- +91-131-2615164 , +91-131-9219415164
Mob:- +91-9837084355
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