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Monday, December 10, 2018

Nov 26th Sesame Seed Update:-

It has been almost 50 days since the new crop arrivals have started.The crop as we all know by now was projected to be small and It is quite evident from the arrivals that the numbers were close to reality .The crop is short by almost 60%. As against 400,000 MTons last year we have a crop around 160,000-170,000 Metric Tons this year. 

Factors which pushed up the prices in Octoberwere
1:- A smaller crop.Panic from Supply side.
2:- A much smaller carry over.
3:- Anticipated domestic demand of India.
4:- Covering for the forward sales. 
5:- Stockiest being active at low levels. 
6:- A very strong USD which moved from around Rs 69/USD to around 75/USD in a short span.
7:- Anticipated strong global demand.
However ever since Diwali holidays got over the markets moved in the opposite direction , it was a natural correction which was inevitable looking at the one way movement of prices that happened for 3 weeks.

Factors which have made the correction happen are
1:- Everyone covered their short sales as a Stop loss in a rush.
2:- Almost anyone who is into sesame trade is now holding some stock , although I doubt the volumes are big since the value and prices are almost double.
3:- The Rupee gained back whatever it lost which means in Dollar terms the prices are almost same.
4:- The African imports have started to trickle in which will keep the supply chain well lubricated for the months to come.
5:- Crisis with money roll over as people bought for their forward sales as well and everyone would like to hold the cargo physically now, also the farmers dumped everything into the market yards as they got a good price for their produce and they need cash upfront.
6:-Since the markets were moving up so rapidly the buyers in general decided to wait and watch as the destination spot markets were lower than the Import prices being quoted from India.
7:- Profit booking from smaller merchants who had low price stock.
8:- Conservative buying by China which had good port stocks and decided to first bring its local prices up to global price levels.

Factors that will stabilize or push up the markets should be  
1:- The arrivals have dropped to historic lows, never in the past 18 years of my business have I seen that big producing states of UP/MP collectively put are less than 200-300 MT. Total bag arrivals from farmers are less than 3000 Bags in 2 States almost 20 Major yards put together. Rajasthan and Gujrat are substantially low as well.
2:- The strengthening Rupee once it stabilizes at around 69-70 range will leave the scope for local prices to rise which will start reflecting in USD quotes made to the buyers.
3:- People who imported from Africa wanted prices so stabilize in fear of defaults if prices kept rising,with the correction it has made things a little easier and I am hopeful that defaults from Africa will not happen in a big way, once their cargo gets loaded they will also want prices to go higher as the low priced imports were mostly forward sales but the high priced cargo's are mostly additional quantities. So the bears will suddenly switch side to bulls.
4:- Since the buyers waited it meant that a window of 2-3 weeks of low purchase happened which must have brought down the destination stocks to bare minimum, once the spot markets empty out the Panic at destinations will kick in.
5:- With replacement price still remaining high domestically the stockiest will hold on that much longer creating a tight demand supply chain. 
6:- No Buyer at High levels , No Seller at Low Levelsituation should prevail for all.
Overall I think looking at the global situation prices are fairly placed for the season ahead, irrespective of trying to catch the Bottom as buyer or Top as a seller it would be advisable to slowly be in the markets at all time to avoid getting into Panic buy/sell situation.Periodic corrections will happen and the movements this year will not be subtle but in 2-3% Range , thats more than $50 up or down at any given time.

India will have to import Sesame Seed from Africa in large quantities to keep its Hulling factories running and the last Korean tender showed us that the supply will be limited this year irrespective of High prices. In a bullish year with High Prices we always advice to try and buy the best quality, stick to the quality you know best.

We are of the opinion that the Sesame Seed prices will remain firm. With 10 months still to go the chances of UP days are more than the Down Days.

Monday, November 5, 2018

Sesame Seed Market Report 5th November 2018

As we celebrate Diwali the festival of lights , we at Shakumbhri hope that the it brings Prosperity Good fortune and good health to everyone.

This week almost everyone in India will be busy in festivity and the farmers will take their well deserved break before they get ready to toil again in the fields for their Winter crops , I thought about sharing some information about the sesame market as it unfolded in the last 1 month and try to look ahead at the things that might or might not be.

In my last report on 16th July 2018 I wrote the following,

"By the time we finish this season and merge into the new 2018 crop we could be closer to levels not seen in a long time, low priced stocks at destinations would have finished and the markets adjusted to new levels. Most commodity traders would agree that when we switch the season on a higher level the price volatility is that much bigger but a crash is highly unlikely because that would mean the whole trade to loose money. Its alright if it happens the other way around when markets open at the bottom and remain their but a crash from high's to low's takes more than just demand to bring it down.

Slow demand at best can keep the markets stagnant or trigger small corrections but a overall bullish sentiment usually prevails , at-least until we reach the top line.

For the season ahead ,Top line in my estimate for good quality Natural Sesame 99/1/1 type is USD 1850-1950 PMT and USD 2400-2500 PMT for good quality Hulled Sesame . Bottom lines should be USD 1250-1350 PMT and USD 1650-1750 respectively. "

Its almost scary that every word has turned out just as I had thought it would. I guess its my
" I told you so " Moment.

The new season for 2018 has begun and what a start we've had, levels not seen since a long time in local currency but within range in Dollar terms due to the exchange rates.

The New Crop 2018 :-  

Till about a few months ago everyone is India expected a good crop, the prices were favourable , the weather just right and the general sentiments and logic told us that the sowing should and would be better than previous years , all was good until Mother Nature decided otherwise , it rained and it rained and it rained , surprisingly all the more in the sesame growing regions. Farms got washed away , the farmers decided they've had enough ploughed the fields and left the little surviving crops in the field to wither and rot away. The few areas that survived  is all that we had left. I heard contrdicting informations from different people so I decided to make a long 3 Day field trip to the sesame growing areas in the last week of September. What I saw was exactly what was told , the high altitude fields survived but the rest was in a mess , the yields per Hectare reduced drastically as rains or lack of it when needed shunted the growth. Long story short we were not going to have a crop that we needed.

Last week our Trade association IOPEPC came out with their survey numbers , the numbers shocked some and reaffirmed others conviction in the crop size.

Madhya Pradesh ( MP ) :-  22,500 MT
Uttar Pradesh.     (UP).  :-  41,500 MT
Rajasthan                       :-  40,000 MT
Gujarat                           :-  38,000 MT
Others                            :-  36,000 MT
Total                                   178,000 MT

Now last year i.e Oct 2017 this Number was 418,000 MT and the year before i.e Oct 2016 was 560,000 MT . We, myself including debated those number furiously, but now since the carry overs are down to almost Zero those number make sense. We would not have exported 30,000 MT monthly if we didn't have those numbers since the domestic demand alone uses up about 150,000 MT annually.

Let us assume the predictions are off by 10% , we still end up below 200,000 MT . The Carry overs would not be more than 10-15,000 MT by any calculations and we can easily discount that as we would anyways have that much minimum going into next year even if prices double or tripled.

We will still need about 150,000 MT for our domestic consumption , that demand is price elastic and even with a demand fall of 10-20% it hardly makes a difference as that would be substituted by some speculator stocking.

That leaves us with practically nothing to work with, all we can do is wait for Imports to come in and offer our buyers based on that. The next crop pressure will not be before May 2019 when the summer crop and the Bengal crop comes in.Can the world wait up its consumption for the next 7 months, I don't think so, and even that comes with " *Conditions Apply " about the size and demand.

All of being in food business for various commodities know this very well , price is a deterrent in consumption only for a while then people stop caring. Which commodity ever have people stopped eating because it got expensive or which they ate up too much just because it was cheaper. Doesn't really work that way, at least I never believed it did. You can go through my blogs 10 yrs ago and I still maintain that demand merely shifts (from Seller/Origin/Quality/buying pattern/stock levels) but never falls.

 If our sales our down it just means our clients are not buying but someone else's client is buying and people still consuming. Clients and consumers are two different entities , so lets not confuse the two.

Ever since the crop came out and caught everyone by surprise the discussions have gone up, not because we have spare time at hand but because after many years the markets lacked a clear direction, we need to go through some of the discussions and draw our own conclusions to the road ahead, we are just a month into the crop and with 11 Months still to go it is going to be a eventful year.

The Discussions :-

Everyone is entitled to make his/her own assumptions on the current situation ,as always I leave it on you to conclude the outcomes of each.

1:- The demand will drop drastically, people will stop eating sesame and prices should correct. True to a certain level I would say but can a 10-20% drop in consumption substitute the 50% shortage in crop that India has. Will a smaller Myanmar crop ( No data to verify though) not play its part , will the bullish stockiest not create a shortage by hoarding , can it mitigate the lost cushion of carry overs that the trade enjoyed for the last few years .

I say that again with conviction , drop in demand is very different to drop in consumption.

2:- There were talks about global trade balance at our Annual meet , numbers of big African crop were put out , they might be right they might be wrong, we shall find out soon enough , the argument was that the world needs X amount of Sesame and the total production is also X so why the panic , easy maths right.

Thats what we have been told over the decades by Big corporates that there was a surplus production of a certain commodity at origin , prices should crash but at the same time there was a region in the world which starved and went to bed empty stomach. So the point is, if there are 10 people and 10 apples its easy to assume that each should take 1 and sanity should prevail but thats hoping for a Utopian society. Chances are that someone would try to eat 2 apples or one of the apple would Rot.

The global trade is not just about having something , its also about having it at the time when you need it most. Before or After are risks that need to be factored in.

                            Murphy's law is an adage or epigram that is typically stated as:
                                         "Anything that can go wrong will go wrong".

3:- Ever since that I have joined business the first argument of Bulls was " Africa/China has a bad crop and we have a good crop that means prices will go up ", now some people are arguing
"India has a bad crop but Africa has a good crop that means they will flood India with their cargo and prices will crash ".

In Isolation the statements sound right but when you read the two in totality the logic is bizarre. Agreed that African cargo will come to India but does that mean they will sell it cheap to us , does everyone have access to that cargo , will in arrive in time to create enough pressure to trigger a fall , Africa of 2019 is not what it was 5 years ago , they are not isolated with the global prices and demand anymore , 60% of African trade is handled by Indian Brokers/Exporters who organise/finance the trade between Africa and China, with 1 more NET BUYER in the markets they would know where to move the goods to get their African suppliers the best value for money.

4:- Carry over's world over are at all time low , for years we talked about Chinese port stocks but failed to acknowledge that India had its own "Cushion stockpile " , the only difference was while Chinese stocks were measurable the Indian stock was fragmented into 100's of Big/Small stockists and was never in the limelight. However the power of that stock is what we saw last year , despite a poor crop it kept feeding the market with full vigour and at all levels and practically stalled the prices for a good 6 months , it was only after June/July when the warehouses really started to empty out did the markets manage to gain pace.

With that Arbitrage gone of low levels stocks which usually by now would have triggered a profit booking spree and pulled the prices down the markets seem to be moving in one direction.

5:- The export numbers of Indian sesame have been stagnant in the range of 300,000 MT annually ( Plus/Minus 10% ) over the last decade or so , I always wondered why?

While African exports moved up twice thrice in Quantum we remained stable , I guess the difference was while India adjusted itself to the worlds demand of Food Safety/Better Quality and Services , smaller things like Sorting Natural for Bakery Consumption , Palletising the cargo to save costs at buyers end , cleaning the Natural for better yields at Chinese/Taiwanese/Malaysian Oil mills, the Africans at the same time were doing FARM to CONTAINER business. They pumped in the supply chains not for the end users but to the Industrial demand of China/Vietnam etc.

Lately they have started to catch up in the Hulled/Sorting business as well but the transition will still take a while , the fascination from Volume Business to Value Business is a tough call for most business houses to make , it sometimes requires not just a change in mindset but the whole business model itself.

Having said that , the end use market of the World still depends lon India to a great extent for supplies, yes there are options available but not everyone has access to those at all time and neither are the options big enough to replace India in a flash.

The stocks at destinations are also at all time low , usually in a Bull markets we saw 2 Scenarios pan out

a:- Markets went up in India , we quoted high levels so the buyers went looking for cargo in the spot market , they found someone who had stocks at low levels and he decides to book profit at current market price and offered lower. The buyer now has cargo at low price so they could afford to wait up which caused panic in the markets and prices dropped.

b:- The same scenario played out domestically as well , as soon as markets went up there was someone sitting on low priced stocks who decided to discount and take home the profits , with price differential the market parity mismatched.

All 2 scenarios created a Cat and Mouse situation, usually it played out just the way it should but this year with historic low carry over the situation may just pan out differently.

6:-A seller offers his clients  X price, the client has several options and decided to take the lowest price from a new Broker/Supplier , this creats a doubt in the genuine sellers mind, he thinks that market is not accepting X levels and we must move down , in another scenario the lowest bidder (Profit booker) with X-1 tried to make a sales pitch to a client and the client decides that since the volatility is too much I will stick to my regular supplier who has X price and leaves the lowest bid.

Now the Lowest bidder is thinking that markets are not accepting his levels even though he was cheaper that the benchmark price so there must be a downside in the market while the Regular Exporter is thinking that I offered a fair price and it got accepted so market is firm.

If you have already experienced this situation then you are definitely in a Bull year already.

Arrivals and Stocking :-

The real arrivals picked up only around 5th November onwards, in the 4 states of UP,MP,Gujrat,Rajasthan it peaked to about 35-40,000 bags , thats about 3000 MT , even with the peak its averages about 80-85,000 MT over the last 30 days which has already arrived in the markets.

Stockist took some , the forward sales of Oct/Nov would have consumed some, the domestic demand will eat up a big chunk as well, assuming after Diwali the trend continues( I highly doubt it would , arrivals may peak for a few days at best) for the next 45-50 days i.e till Dec 31st we shall have a 100,000 MT more.

Assuming the bears are right , the buyers refuse to buy a anything at high levels even then by the wildest of calculations we shall have at beat 100,000 MT stocks split between 1000 Stockiest  spread over 4 states in India for the next 9 months , good luck trying to bargain and reason with them.

African Crop/ Imports into India :-

Easily the most important factor in Sesame trade over the next 11 months. The crops coming in Ethiopia , Sudan , Nigeria , Burkina , Mali all seem good, so they say.

Ohh wait, wasn't this the exact situation last year , click on the link

Just scroll down to The African Story so far :-

The Sudan crop which was expected to be bigger .......... ( You can edit a few things as per the information you have)

 The only thing that has changed is India's buying volumes from African and the sheer desperation of Hullers in India to look for cheap cargo's worldwide to make cheaper Hulled Sesame to supply to the most High End Quality Conscious Consumer markets across the world. Irony at its best.

Double Skin Bengal Sesame had been a bottleneck for any price rise in the past 3-4 years , everytime the markets went up a surge of supply from the Double Skin lobby pulled it down by discounting 10-15% , they did a remarkable job in turning a inferior quality seed to a pretty good one , sheer hardwork I must say, but sadly that is not the case this year. With a very small crop the Hullers have to fight it out with the Oil Industry to get access to that cargo and it certainly won't come cheap. The Oil Industry is far more cash rich and price neutral compared to the Hulled Sesame Industry.

Currency and economic situations in Africa continue to play its pivotal role , with things changing by the day it is almost impossible to predict the impact on commodities they Export. Sudan's economy is in a turmoil , you never know which sanctions may get applied tomorrow or may get relaxed day after , the daredevils who can risk thousands of dollars will continue to work and on good days make money and on bad days take it with a pinch of salt but the conservative markets will continue to look for safer options in the meantime.

Facts and Theory :-

1:- Fact is ,India has a short crop

2:- Fact is , carry over stocks worldwide are at their lowest in decades

3:- Fact is , for the first time in History Indian Exporters did not rebid for Korean Tender, they decided to stand firm and even though there was profits to be made at higher levels if they held physical stocks they decided they did not want to sell cheaper than a fair market price. All this not because they thought their stock would fetch them higher price , someone should have chickened out and Bid low but not 1 did. Why, because you only sell below market price if you think you can cover again both in terms of price and volume. Neither of the two looked easy so they stay put and decided that we shall not offer below market price. 

4:- Fact is , In Rupee terms the prices are at 3 years high , with the next barrier only 10% away a breakthrough might take it to levels never seen before , a crash at best may stabilise it in the range 10-15% from the peak.

5:-Fact is , Cash flows are tight , with all 80,000 MT arrivals so far sold/bought/stocked tight the cashflows have been tight , after Diwali the cargo's will start moving into Bank financed warehouses which would free up a lot of cash for spot buying.

6:- Fact is , Low priced averages have already been rotated twice/thrice for profit bookings , the cargo are now headed out which means the bottom average of the market has moved up, with higher bottoms and even higher spot the average prices of stocks are bound to rise , for the Bears to imagine a fall it would mean that 90% of trade would make a loss , once again not a real believer of that theory. Their will be windows of exit, the smarter one's will get an opportunity, the greedy one's will get stuck.

The same goes for buyers, anyone trying to find the bottom may just fall out of breath while the one's who average out at all levels going up as well as down may float merrily the whole year.

7:- In Theory , USD to Rupee will be interesting to watch , if the Rupee falls it would make the Imports expensive which in turn will fuel the local prices to move up in tandem. Funny situation we find ourselves in this year.

8:- In Theory the African crop is huge, but thats always been the difference between India and others.While we try to push markets up telling we have less the others first cover themselves by telling you they have enough , no hard feelings , that really is the way it should be with smart business.

9:- Fact is, We still have 11 MONTHS to go. 

Once again wishing everyone a Very Happy Diwali, Please feel free to contact me for Business or General discussions.

Attaching a link to a funny video one of my dearest friend in Canada sent me years ago. Before you watch just remember ,in your mind replace
Indian = Your origin ( As a Buyer )
Chinese = Your Seller ( His Origin )

Please do not get offended if you don't like the ethnic touch, its just for fun.

Mukul Gupta ( Director)
Shakumbhri Expo Impo Ltd
An IFS, BRC and SEDEX Certified Company Manufacturer.
Tel   :- +91-131-2615164 , +91-131-9219415164
Mob:- +91-9837084355 , +91-6396010144

Disclaimer : - All of above is just observations and general market news , decisions you take based on the above are entirely yours.

Friday, July 27, 2018

Sesame Seed Market Report/Korean Tender July 16th 2018

Hello Everyone , 
How many times have we ,The sesame people used McDonalds as our business reference. 
 For, "What do you do?Sesame , you mean Oil ? " the "Oh , you know those small pearly seeds on top of McDonald burgers" always worked.

I didn't even know they made a movie about them till a few days ago. "The Founder" , if you've not seen it I suggest you do ,It's not everyday that they make a movie based on Food Entrepreneurs.

What really caught my fancy was the sales pitch of Ray Kroc,the man who made McDonalds famous

                                      “Increase supply and demand follows” . 

How true is that , all these years we've been taught otherwise, while the market leaders always saw it differently.

For years we concentrated on the Micro economics of our trade and ignored the Macros. The world demand and consumption doubled over the past decade and so did the production. China at the moment is Importing around 10,00,000 MT plus apart from its own production. I read online that their per capita consumption is about 1.1 Kg/Person annually   ( the numbers add up too ). Convert China number into oil and consumption number is about 500 ml/Person per year. Half a Liter per year thats it , thats average 1 bottle per household per year.


Agreed these are all Oil seeds put together and one oil cannot replace the entire food chain but look at the numbers we have here , Imagine the scale and scope for growth. Our industry could grow two folds in matter of years without even making an effort.In India the sesame consumption I assume would barely be few hundred Grams per year per person.

“We really don't seem to understand what exponential means. Things move slowly at first and then curves up amazingly” It’s all about the supply side. African nations increased their supply and china kept buying more and more,a whole consumption pattern was created with increased supply chain. Hope the Indian Domestic market catches up soon, if anyone has ideas please feel free to share and discuss.The future looks bright.

Anyways thats all general chit chat, lets move to things that concern us in short term.
Korean Tender, Carry over stocks and the New crop 2018.

Korean Tender 16th July 2018 :-

India as usual got the bigger share , the total bids for 10,000 MT were about 19,000 MT. The bids usually are not a indicator of stock in hand as people sometime double bid the same quantities at different prices and some short bid as well. Overall I think this was a well covered Tender since the price movements were already factored in. As soon as the dates finalized  the prices started to move up and people averaged their purchases, this should have given the bidders a fair leverage to take home the profits with the volumes that were on offer. 

Koreans most probably should be out with 1 or 2 tenders more as they still need about 15,000 MT more to cover their 2018 buying quota. The timings would be critical though.I doubt they can wait till November so if they are in the market before it would clash with peaked domestic demand due to Diwali Festival and limited arrivals as sowing has been a little late overall. A tricky situation indeed.

Carry Over Stocks :-

For donkey years we have been crying wolf about the carry over stocks but no one ever has been able to judge the depth and size of the stock pockets. The cargo keeps flowing and flowing and flowing. This year however for the first time I've realized that stocks indeed are at all time low. Yes people are still holding on to little quantities here and there in anticipation of another rally but the volumes are pretty evident.Material is available but it has a clear price tag to it , days of distress sale are over.The stock now is in financially strong hands, since most of the commodities were down all year people booked profits at every levels they could .

The forward trade that happened rampantly was based on these old carry overs , someone holding 100 MT could speculate to sell 200 MT new crop forward since he knew he had something to fall back on if anything drastic happened , its was a physical hedging done at market yard level based on which the exporters could then do the same thing and offer forward into new crop with the seeds still in farms. This chain I think this year would be hard to maintain , of course there would be some daredevils who would speculate openly but thats a gamble which only a few can manage.Its a head/tail kind of deal between the supplier and the buyer and one of those two is sure to loose.

The road ahead for atleast 2 months , I'm  saying 2 because by 30th Sept even though the arrivals may be huge, the crop news will be an open secret and will leave little chance for the stocks to make any real big impact , but for the next 60 days the stocks are the market movers for sure.I have a feeling that we will see atleast 20 days of Upward trend and a few days of stable + downward trend in  this period. The stable and downward would be mostly slow demand driven while the UP days would be actual demand or speculation driven. With the tender out of the way we still have the hulled demand which continues. Going by the past numbers we would need about 20-25,000 MT per month at bare minimum for exports i.e about 40-50,000 MT till Sept 30th to be physically processed and moved out.

At the moment almost every sane exporter will have a little plus stock,  the levels could vary as to when they actually bought it, like I said above, profit booking happened at all levels so the low level stocks are mostly accounted for and most of the cargo in hand will be of a fairly higher average. That means we are almost in the zone of back to back pricing which leaves little scope for under cutting and price competition at large scale.Some buyers who supported their suppliers all year round with consistent orders are sure to be the best beneficiaries, they would get the best deals possible which would further enable them to out-price their competitors in the longer run.

Carryover/Port Stocks at China is also a major factor, everyone keeps a track of that like they do of his own warehouses. So they should too, it definetly gives a fair idea about the consumption as well as the Import arrival pattern of China. However it is fairly difficult to judge the impact based on its volume , sometimes the port stocks may go down below 100,000 MT and yet the market doesn't move and sometimes its above 150,000 MT and we still see the China buying aggressively.

What's interesting is the timing of "Stock Price" viz a viz "Current Purchase Prices" 
at Origin. For a consuming platform like China it is inevitable that they will have huge stockpiles of cargo all the time , its just plain volume business. Some Importers in China probably move more FCL's on a day than the number of Sesame Pallets an average European/American company in a business day. Thats the scale I'm talking about.

Simple business sense tells us that if the stocks at of low levels at consumer end it is better that at Origin prices are high, it helps move the stocks faster and at better levels , while if the stocks are of High levels the low/stable prices at Origin are better because it helps in rolling over the stocks with a better average price. 

Right now after a long long time the stocks in China are all relatively low price levels , which means its better for them if the origins stay firm .They can move stocks quicker and with better margins while slowly bringing the market prices up to a levels where they can again cover at current levels. The cycle keeps repeating itself over and over again both ways.

The winter origins of China purchase like Ethiopia, Nigeria , Sudan , Burkina , Mali etc are all rumored to have little stocks,  the only origin where crop was harvested recently was Indian Summer crop , Tanzania and Mozambique.

Indian summer crop got cleaned up faster than it arrived as prices were attractive , Chinese buyers knew about certain quality and quantity problems with Tanzania/Mozambique and Indian exporters were eager for volumes. Worked well for both I would say , after a long long time we saw back to back business happening smoothly and with mutual benefit.

Talking about carry overs and stocks at other destinations I would assume there isn't much anywhere. In a dull market (Period of Jan'18-May-18) I doubt anyone was speculating on a big rush and was hoarding sesame. Yes there could be a few but thats definitely not a reflection of the whole market. Most people were back to back and now have a chance to sell at a fair price.

The Season ahead :-

Like I said above prices being high at Origin has its own advantage and disadvantage. The good thing is that goods at destination move faster the bad thing is that orders for the Origin slow down. Everyone wants to first book their profit , watch carefully and then enter. Everyone is looking for sweet deals.

India over the years has become a reluctant seller. Everyone wants to double their investments in 1 seasons cycle. This is the reason that even a increase of about 40% from the seasons low seems small to the stockiest.The Indian story starts and ends with less sowing more rainfall , sometimes I get a feeling that people here actually pray for less crop concentrating on profits to be made on their stocks rather than focusing on the bigger picture of world demand/supply.If you argue in India about a huge crop the chances are you will be countered negatively, strange but true. 

The sowing as I have always maintained varies to a limited extent depending on farmers preference and commodity prices.Usually sesame sowing areas are not feasible for a variety of crops but the farmers as we know are amazing people , if they get to it they can do the impossible.In recent times we did see the Sesame sowing area stagnate or reduce due to better prices of pulses but with reversed trends we are hopeful that has changed this year.Sporadic rains continue to be a mystery as it can change the volumes drastically within weeks. Till last weeks the areas that were almost dry are now water logged , paddy and other Kharif crops have that advantage of late sowing and late harvest which sesame doesn't.Rarely have we seen Re-sowing of sesame once the initial sowing fails.

However I am hoping this year of a better harvest than previous years , putting a number right now would be shooting in the dark.

The carry overs as we discussed are at bare minimum , the carryovers give a physical hedge every year for forward trade as well as stabilizing the markets for sudden demands such as " Indian Domestic sales for Winters". The short bursts of demands are controlled and catered by stocks in hand, with nothing to fall back on the new crop 2018 will always be under pressure.

There is another Korean Tender rumored before September . A tender before new crop would for sure empty the exporters as unlike local stockiest they would not be carrying Natural Sesame stock into the new season. The would mean almost everyone would be in to cover stocks for new season from Day 1 .

The "Bengal Double Skin" Hulled which has been a controversial product over the years but has evolved beautifully to cover the "Low Priced" but "Good Looking Seed" markets with no real concern for food safety or taste will take a hit this season. The bengal crop was stated to be less by about 30% which means the excess quantity they had to offer to the hulling units is gone and their prices up. The oil industry had first rights to this double skin quality and it has started to show already with prices rising quickly. This means a lot of factories will shift back to white sesame raw material ,volumes could be as high as 40-50,000 MT Annually ,the low priced cargos will not be available readily means at destinations everyone to have level playing field. 

By the time we finish this season and merge into the new 2018 crop we could be closer to levels not seen in a long time, low priced stocks at destinations would have finished and the markets adjusted to new levels. Most commodity traders would agree that when we switch the season on a higher level the price volatility is that much bigger but a crash is highly unlikely because that would mean the whole trade to loose money. Its alright if it happens the other way around when markets open at the bottom and remain their but a crash from high's to low's takes more than just demand to bring it down.

Slow demand at best can keep the markets stagnant or trigger small corrections but a overall bullish sentiment usually prevails , at-least until we reach the top line.

For the season ahead ,Top line in my estimate for good quality Natural Sesame 99/1/1 type is USD 1850-1950 PMT and USD 2400-2500 PMT for good quality Hulled Sesame . Bottom lines should be USD 1250-1350 PMT and USD 1650-1750 respectively. 

Natural above $2000 and Hulled above $2500 is a possibility but the exit windows will be too narrow at any given time.

Factors for Top Line :-
1:- Low Stocks and empty warehouses.
2:- Relatively less new crops compared to previous years in India,China ,Myanmar & Africa.
3:- Good domestic demand in India.
4:- USD movements against currency of Exporting countries.
5:- Triggers like general bullish sentiments and stock situation at Chinese ports.

Factors for Bottom Line :-
1:- A relatively huge crop as compared to previous years at all origins.
2:- Less stocking due to high prices.
3:- Back to back business resulting in stagnant and spread consumption patterns.
4:- USD movements against currency of Exporting countries.
5:- Chinese port stocks replenished periodically or huge inventory built up.

To sum up we have a feeling it is going to be a good year both in terms of prices and movement of goods. The Sesame market has matured tremendously over the years , the supply/demand lines well identified.What goes where , who buys what , what is available when, are all chalked out. The smaller things can create nuisance for a while but in a larger prospective China remains the KING,Africa remains the volume supplier and India remains the trusted supplier of Hulled, Sortex Sesame , market information and Gossips.

Please feel free to comment/correct/share just refrain from passing this as your own report.Giving due credit is important.


Mukul Gupta
Shakumbhri Expo Impo Ltd.