Market Report Sesame Seed June 15

I hope everyone is safe and healthy wherever they are and taking all needed precautions to keep themselves and their loved ones safe.

In these tough unpresedented times we need to look out for each other and I am sure this nightmare will soon end. Sesame Seeds as we know is way down in the priority list of the food chain in most cases so I don't really expect any dramatic changes in our trade but nevertheless this is what I and you do, so its important that we discuss it in all sincerity.

Summarising ,Last 3 Months till Date ( India) :

1:- Till early March the world was starting to feel the heat of Covid scare, China had a lockdown, EU/US cases had started to go up and widespread panic was setting in , but things were still moving. By end of March things were a little more scarier , India Imposed a lockdown suddenly and things came to a standstill. EU/US and other countries soon had restrictions too, public places and restaurants were the first casualties.

2:- With 99% Hulling factories closed in India the stock piled up and pending orders started to build up , Imports which were coming got stuck at the ports, shipments which were supposed to go out got stuck at various levels too. Most buyers understood the situation and co-operated. At consumption destinations the warehouse stocks started to shrivel up.

3:- April was a total wipeout in terms or production, by early May things got a little easier , production resumed in limited capacity , Imported cargo's got cleared and a lot of the excess cargo booked by Indian companies got diverted to China as things were still better there. But still the stock buildup for the hulling factories was more than normal and with a sudden fall in Rupee it was priced much much higher than anticipated , adding to the woes were exorbitant demurrage/detentions that the importers had to pay.

4:- By end May/Early June the Gujarat summer crop started to pour in and prices started correcting , the pending orders moved out , most without any problems but some clients did take advantage of the situation and revised/cancelled contracts which I personally think is not the right way to do in tough times.

5:- Then came the Korean Tender news , with attractive low levels India got all 9000 MT as expected at really really competitive levels. Just as we thought its going smooth the bad news about Bengal Double Skin crop which is a huge crop for Indian crushing industry started to come in, with damage numbers ranging from 30%-70% a buying frenzy by stockist and speculators tried to pull up the market for a short time.

Summarising ,Last 3 Months till Date (World) :

1:- Africa started to face problems in shipping by April ,with on and off lockdowns and limited availability of container and vessels which meant that a lot of cargo which could have been sold or shipped out got stuck at the origin.

2:- The consumption worldwide started to go down too, the worst hit were stand-alone Bakeries etc, unlike India or developing nations the Breads/Bakery shops in Europe/America are mostly located at prime real states to bring in better and bigger clientele who would happily pay a premium for their product, now with limited movement a lot of that business has moved to supermarkets, where people can just buy everything they need under one roof and so smaller shops are on the brink of closure. How many people that you know can still walk into a bakery establishment and pick up that bread which is kept in an open basket that "Could" have been touched by someone else. Not many I am sure.

So basically the Super Store sales of bread by Corporate suppliers are Up while the artisan breads like the NY Bagel's or Simit etc will be down. In Middle East sales of bulk pack Tahina to restaurants will be down but small bottle sales for home consumption could be up. 

Bulk Sesame oil sales to restaurants will be down in South East Asia but Domestic bottle sales may have been isolated.Someone catering Sesame sticks/Crackers to Airlines/Hotels may have zero demand but someone selling Sesame cookies for a government run food program may see a quantum jump. So depending who you are actually catering to your perception for Demand and Consumption could be different.

3:- Sesame Seed as we know is just an Ingredient ,I've said this before and I'll say this again, we are probably the only industry that doesn't spend money or time in promoting the benefits of the product that we sell/buy.

In a pandemic situation while many products marketed themselves as Immunity boosters we simply rely on people's decision to Order a "Burger" , Eat "Hummus" , ask for some extra "Tahini" in their Falafel burger, Use a little Sesame Oil in their Hot Pot because it smells and tastes better , buy a fresh "Simit Bread" covered with Sesame Seeds while they stroll through the markets or garnish their Salads/Noddles with some seeds for that crunchy taste.

Let me know if missed on some other fancy uses :)

Our product identification is mostly on Junk or Soul food which sells more in Happy times , I hope Happy Times return soon.

I really hope for my sake and yours that people keep doing what they have been doing all these years because I'm yet to meet a person who craves for " Sesame Seed" . 

We were, We are and we will continue to be replaceable if we continue to do business as usual.

Running Numbers and Facts :-

1:- Unfortunately Indian Export/Import numbers have not been officially updated so we will simply have to assume. I assume the Imports were same or maybe higher than the average of 15,000 MT/Month which means about 45,000-50,000 MT was imported in these 3 months , mostly for Hulling i.e.

About the Export numbers the situation is exactly opposite , The exports in no way could have been higher than the average of 20,000 MT/Month, Remember India has not exported more than 340,000 MT annually in the last 5 years and this year we would end up below 300,000 MT when the numbers do come out.March was slow, April was a wash out and May numbers would probably be higher just because a lot of pending shipments moved out not because a fresh demand.

Now that means a lot of cargo from India is on its way to the consuming markets where 

A:) It will replenish the reduced stocks.

B:) Ease out the supply situation as the consumption is low anyway.

2:- The Indian Summer crop can easily be estimated to be about 60-70,000 MT for White , however most of it is good 99/1 grade which will go for NSS sorting with limited supply available for Hulling unless someone desperately needs ready cargo. The stockiest/ speculators will hold about 50% of this cargo for later supplies.

3:- Carry over stocks situation in India is the same as it was in March , nothing much has changed as factories didn't produce , spot demand was met by the Imports and forward demand by summer crop. Whatever cargo was sitting in the warehouses is still very much there , I would estimate it to be around 25,000-30,000 All India basis easily. This cargo probably wouldn't be available easily till we get sure shot news about the winter crop. Stockiest are already loosing money on it and they would like to hold on a little longer in anticipation of some sudden demand or a crop failure.

4:- Imports from Africa have dried out , most people had diverted extra cargo to China or elsewhere and with high Rupee and falling domestic market it made no sense to book afresh in Africa which means only limited volumes will come into India in June/July. This I think is an interesting change to watch out for. If you book Africa today the price parity for Hulled Sesame today will certainly be not below current levels which practically stems any chances of a big fall in prices for Hulled in the coming months.

5:- As you all must have read there was a huge movement of Migrant workers from Cities to the Villages in India , they are back now and not going to the cities anytime soon as the general perception among the poor is that " Why would I get stuck in a strange place in case of another lockdown when I can be home with my family " and 

" Its a rich man's imported disease which is more in Big cities , villages are safe " also

the jobs are anyways limited. So these people in villages will surely not sit idle , they will do manual labour provided by the Govt/NGO's etc which right now is about Restoring Water bodies in preparation for Monsoon, building check dams on river fronts etc. Apart from that the government is leasing out a lot of land it owns to landless farmers for cultivation , they would grow something, not saying " Just Sesame" , but whatever grows in that area for that matter, pulses, grains, oilseeds, vegetables , cattle feed could be anything but surely not a single farm will go untilled this monsoon season. India will have a bumper Kharif Season.

Which means the first part "Acreage of Sesame" will be higher than previous years no matter what anyone says.The second part of "Yield/output " will depend on how favourable the weather remains for the period of the crop

6:- Tanzania /Mozambique and other East African crops have started to come in and most say the numbers could be around 220,000-240,000 MT

7:- Port stocks in China were last said to be hovering around 200,000 MT mark with outgo reduced from 3000 MT Daily to below 2000 MT Daily , however new arrivals are said to be slowing down as like all smart buyers they did not buy much for May/June shipments in anticipation of East African new crops and slowing consumption. 

8:- Indian Exports at "BEST" could touch an average of 20,000 MT per month in the next 3-4 months till new crop is available , So say till 15 October "MAX" we need about 100,000 ( Hulled/Natural combined ) at " MOST " to sustain our factories, anything more, it simply sits in the warehouses and anything less we panic and start booking more from Africa. 

Easy as the number may look, its now a battle between the " Have's " and the "Have not's " , one Exporter/Trader may have excess and another could be short , this delicate balance is what's probably going to keep the market going for the next 3-4 months till ready availability for all returns.

9:- If the worldwide consumption is down I think the real impact will start to show in the coming months more than it is evident now. Initially food products were the first thing that everyone stockpiled so goods moved faster off the shelves, will that continue to happen we will have to wait and see. 

A drop of 30% in consumption is reported from all areas worldwide and probably in all commodities.Since we are eating less from outside the food wastage numbers which were said to be about 30-40% of the total consumption worldwide have started to show up, also the diet patterns could have also been altered towards more fresh local produce.

A 30% drop in consumption for Sesame Seed over 6-8 months gives the world a buffer of about 300,000-400,000 MT.

EU population is around 700 Million and in the peak tourist season of May-August almost 300 Million tourist visit various EU destinations and on top of that the local population moves , Germans sip French wine, French enjoy the German beer , Italian relish the Greek Salad while the Greeks are enjoying Spanish bruschetta. Japanese probably stock piled for their Olympic demand , thats not happening this year either. All that is not happening this year.

Not trying to post a grim picture but facts are facts.

Conclusions :-

As always the market is segregated into segments, Bulls, Bears based on fact , lets see the two in isolation.

Bearish Facts :-

A:- Consumption is down worldwide, its not coming back to its original levels anytime soon.

B:-Port Stocks in China are high and should continue to remain so as their new crop arrives in 3 months time and new shipments from Tanzania/Mozambique move in. High priced stocks in China are stuck for good and can/will only move once they are heavily discounted which creates downward pressure in the market anyways.

C:- Unstable currency worldwide are changing the number games everywhere, farmers get a fair price sometimes even if the dollar price seems low.

D:- Everytime there is a quantum jump at one Origin the buyers now quickly move to the next , this is creating a natural hedge which creates high priced buffer stocks which eventually flood the market in desperate sales.

E:- A Big Brazil crop is almost round the corner, Chinese/Myanmar crop comes in 3 months, Indian crop in 4 , then followed by Africa by Dec. So the world will have ample fresh supply in the months to follow , the window for exit is that much smaller. You can get in through the big door but you will have to crawl out the small window.

Bullish Facts :-

A:- India did not buy much from Africa in the last few months so Imports will dry out from next month onwards , fresh bookings will not reach Indian ports before September.

B:- Pan India stocks are low and of higher prices, they won't be available cheap anytime soon or at least not in in bulk.

C:- If the Covid situation improves we could see a demand resurrection as destination stocks are low in consuming countries apart from China.If another lockdown happens in India the supply Lines this time will be severely effected.

D:-With a good monsoon expected , Winter sesame crop could get affected.

My personal gut feeling is that markets will remain rangebound till we get over this Covid mess , Food Inflation is the last thing any government wants as it makes them an automatic target for the media and Villian in their citizens mind. Any business that tries to increase their retail consumer prices will face a massive backlash.Price jump in commodity means the retailers/food processors start loosing money.

In these tough times it is almost criminal to be thinking or hoping for Expensive food as the poor suffer the most eventually. Stable rangebound business is good for everyone for the time being.

Cheap prices will surely not spur up demand as consumption sectors are limited in current situation but Expensive prices can surely divert it elsewhere. Overall I think current levels are fair to everyone, Sesame going down to 3 figures is a possibility ( Old stocks in Africa/Brazil etc) but it would be temporary , on a higher side I think $1350-$1400 FOB levels for Natural Sortex is Max.

Hulled Sesame I see a bottom of $1500-1550 FOB and on the higher side a top of $1700 -$1750 Max. i.e A 10% upward-downward range from current levels in the next 3-4 months.

Thank you everyone , Please do write back with your suggestion and comments and feel free to connect with me on WhatsApp and share this report . It would be our pleasure to serve your requirement to the best of our ability.

Regards

Mukul Gupta
Shakumbhari Expo Impo Ltd
Mob :- +91-9837084355 ,+91- 6396010144
Email:- mukul@shakumbhri.org
              mugupta78@gmail.com
BRC , IFS and SEDEX Certified/Audited Company.

Sesame Seed Market Report Feb 17th 2020

Hi Everyone,

I was just going through my last report of September 2019 and found that our assumptions were true to quite an extent.

https://sesameseedmarket.blogspot.com/2019/09/sesame-seed-market-report-sept-29th-2019.html

"Whats happens in Best case scenario is that for short period the Domestic demand will kick in simultaneously with the Export demand and prices may/may-not rise depending on the intensity of crop arrivals at market yards, if they don't then we simply  Import less, even if they Do we start Importing Smaller Quantities. Both cases will cool off the prices slowly and stabilise them. Max movement in such a scenario should be Plus/Minus $100-$150/MT either ways.Markets remain range bound , Win Win for everyone."


That was good 5 months ago , Lets talk numbers now to first understand what worked and what they have in store for us over the next few months.

Indian Exports in the Last few months viz a viz Previous year.

                                            2019                            2018
September                     22,400  MT                 31,500 MT
October                         23,480  MT                 26,650 MT
November                     26,540  MT                 22,120 MT
December                     37,400  MT                 24,070 MT
                                     109,820 MT                104,340 MT

Indian Imports in the same Period

                                         2019                            2018
September                     11,090 MT                  7,100 MT
October                         11,100 MT                 13,800 MT
November                     29,500 MT                 21,400 MT
December                     19,500  MT                 25,500 MT
                                     71,190  MT                 67,800 MT


Mostly stagnant, only the sudden spike we see in December 2019 was due to the Indian Government notification of Export Incentives being discontinuing from 1st Jan which lead to exporters rushing and trying to move the cargo faster. I belive the January 2020 Data when its available will show that the Exports have fallen or stabilised in Jan 2020. Import I would like to belive should remain in the range of 20,000 MT for Jan.

Indian crop despite all odds, our expectations and according to the survey given by IOPEPC was about 300,000 MT which I think holds true. We saw peak daily arrivals in Mid October- End November in all 4 major states i.e UP/MP/Rajasthan/Gujrat touch 30-35,000+ bags collectively , so that's about 2500 MT x 45 days which makes it about 120,000 MT , in December is dropped down to say half of that so thats roughly 40,000 MT  and say around 500 MT per Day since Jan till now which should add the numbers to around 200,000 MT .

Apart from this I would assume about 20-25,000 MT volumes would have gone directly from farm to stockiest or arrived in smaller market yards data for which is not extrapolated properly. The balance will trickle slowly and steadily in the next 5-6 Months.

SPOT and FUTURE :-

Markets right now are at their lowest of the season but still in the range of Plus/Minus $100-$150 from the highs, it would be interesting to see if they can breach the bottom or revise upwards in the coming months .

What we see at the moment is limited supply and a stable supply line but a slightly discounted/aggressive selling from Hulling units to keep the volumes flowing, once the volumes are covered the discount goes down , so the best price is only for the people who enter first and after that its the same for everyone else who steps in. Yet we see hesitation in the market.

The trade needs to understand that Sesame is now truly a global commodity, with goods flowing in all directions and every 3-4 months there is a crop coming out somewhere which can change the basics of price assumptions depending on its size and demand.

Major Crops flow globally is as follows

China( September) ---> India/Myanmar (October ) -----> Sudan/Nigeria/Burkina/Ethiopia( Nov-Dec)-----> Somalia( Jan/Feb---->India Summer (May)--->Tanzania/Mozambiue/Myanmar(June/July)

I could be off by a few months for some origins and missing some,  but I am sure you get the basic point. The play is not " Who has how much " , the play really is. " Who needs what , WHEN" , its all about the timing , the consumption pattern worldwide have been well defined with sporadic and short bursts of Demand and dull periods , these rarely change the consumption volumes but do bring in the sense of false triggers. There is definitely a consumption growth worldwide but its not concentrated, its mostly spread over the whole year and all destinations combined.

We also need to understand that there is a consumption and production limitation everywhere , India can Import or have any size of crop  but there is a top line in terms of production that it can manage, If my maths holds true we roughly have a built up capacity of Max 25000-30,000 MT for Hulled + Natural Sortex Per Month , Natural/Black etc of course can be anything more depending on what grade is Exported. Similarly Imports into India are limited to few countries depending on the lowest price available , above a certain threshold India just cannot afford to Import since we need to Re-Export Hulled from it , so one origin might have all the sesame and India might be totally empty but we just cannot Import unless the price works out for Hulled Sesame. This limits our options dramatically in the world trade.

China/Africa :- 

This is something the world was not ready for, when Corona Virus started we all thought it would go away soon but it seems to be getting bigger and as on today it shows little sign of slowing down.
We all hope that it will go away soon and normalcy will return to China and the rest of the world. However since China is by far the biggest Consumer of Sesame we cannot deny that it will certainly have an impact on the volumes. Just heard that they are replacing/Sterilising  their Currency Notes since they could be biggest carriers in cross contamination, if its come to this I doubt things would be back to normal in a hurry. Even when the virus goes away it might take weeks before people flock to restaurants or decide to eat out as they used to.

FOOD FIRST , Since everyone is taking precaution in China I would assume that at the moment people would be stocking food in their homes in eventuality and anticipation of the worst , which means most products on the store shelves have either already been picked up or will get consumed/picked up soon enough.
Since most factories are closed or working below capacity it is highly unlikely that the shelves will be replenished anytime soon , that specially since things like Sesame Paste/Sesame Oil/ Sesame cakes etc are not necessary/staple foods for the masses. The "HOTPOT" culture has taken a hit , it was one of the major consumption points of Sesame Oil/Sesame Paste and it might take a while for that to return to normalcy as well.

The port stocks in China are surely moving slowly and the cargo already afloat will eventually reach them too , however from what we have heard they are slow right now in fresh purchase from Africa and the congestions created at the Chinese ports might delay fresh order shipments.

Having said all that we know that the Chinese market is a Giant and they know how to bounce back , if the Virus goes away soon enough and they decide to push up the production to replenish the market and build up surpluses we are in for a wild surprise.

This probably is that most difficult part to predict at the moment and things could move either ways.

Looking at the worldwide stocks I have a feeling that atleast till May when Indian summer crop harvests we should be range bound despite the above fear. Indian government has still not clarified if the Export Incentives will be available after 31st March or not. If they don't then Indian prices will definitely move upwards by 2-3% Minimum in the coming months.

Since India is more or less Import dependent at the moment as you saw from the above numbers a slow down could mean that we are also apprehensive in Importing big volumes as well , this could create a strange situation, if and when the demand revives and which probably will coincide with the Chinese demand the African levels may see a sudden spike since both China and India will enter at the same time and the spot markets here might panic even more due to limited volumes.

Overall I can sum up by saying current levels are pretty attractive for at least 3-4 Months ahead, slow but steady volumes in both buying and selling should yield good returns.I would not suggest  Speculating in either Short/Long positions in big volumes, the best strategy would be to have a rolling stock at all times to protect your top line and to at least cover the stop losses in eventuality of swings in your supply lines, the markets may panic anytime which more often than not results in wrong decisions for both spot and futures.

Someone wise once said "Far more money has been lost by people preparing from Corrections or trying to anticipate Correction than has been lost in taking the Correct decision."