MARKET REPORT SESAME SEED December 4th

We are sure by now everyone is already aware of the drastic changes that have happened since our last market reports.This time however it is global and not just confined to India and hence probably here to stay for long term.Thankfully there were no new Korean Tenders or else it wouldhave been even worse we believe.However there is some unconfirmed news in the market that we may have a Tender very soon this month.

As we have been pointing out ever since July this time that China factor despite what many people thought otherwise was very crucial.The fact remains that their crop was a disaster and they need Sesame Seed for consumption at all costs , if they get it cheap its fine but even at high prices they shall remain in the market.

In our last report we mentioned that the arrivals did not pick up since the new crop came out and we expected them to rise after Diwali which surprisingly they did not as well. The covering pressure which took the prices up early on in the season soon became a buying one. There have been several crop estimate revisions since the sowing this year , from Double to 1.5 times to same but looking at the arrival situation in the last 60 days since new crop started we believe the latest is as below.

Origin	Initial estimates In mt	First revision in mt	Second revision in mt
MP/UP	250,000	180,000	150,000
Rajasthan	100,000	90,000	75,000
Gujarat	50,000	40,000	35,000
Others	20,000	15,000	10,000
Total	420,000	325,000	270,000

As we all know the arrivals from farm levels go on for about 3 months , so taking that into consideration we can safely say about 60% is already out which leaves very little to count on in the coming month.From the initial a huge huge quantitywas sold to China , ofcourse not all will touch their shores as we have already heard about a lot of defaults happening , but never the less the quantum remains big.What has also happened this year was that most stockiest did not get a chance at lower levels to cover as from Day 1 we were talking about a good crop and the buyers kept feeding everyone here about the possible decline once Africa enters the market , this hesitancy did not allow a lot of stocking and the little that happened was sold with the recent high levels, from what we know through our suppliers is that stocking this year is almost 50% of what it was last year and this could be a real tricky situation later on in the year.Moreover the major stocks this year are in the hands of Big boys and strong stockiest who will not panic to sell very easily.

Another 10-15% rise cannot be ruled out not just because of the global reasons but also as traditionally prices do go up about 15-18% from season start prices by Aug-Sep anyways with the interest and warehousing expenses on the stocks. The prices may seem very high this year but if you compare with last year prices they have actually just above the last years highest levels by 4-5% in Local Rupee terms, it just so happens to be a few months quicker that's it, in US$ terms ofcourse it seems like 15-20% higher.The domestic demand in india has not yet picked up fully and likely to pick up pace soon as well , this demand is usually of the Hulled grade so we may see some pressure in that sector soon.

Africa was and still remains the only factor which could have and can stop this emphatic price rise , but as we mentioned early on with global markets the new travels fast and they knowing that their last crop last them barely 10 months in normal buying condition , this year with increased demand and reduced crop they shall literally have no selling pressure at all and the chances of a major correction for long term seems highly unlikely.Their prices as you will notice are very smartly valued at 7-8% above India,giving them a good market share of the Chinese demand with not much problem.We think this should remain the trend for the coming months as well.

The advantage of selling east is also much bigger than selling to Europe or the USA. The financial rotation is faster because of the low transit time and better payment conditions and also much lesser hassles in terms Quality requirement.This is prompting a lot of traders and Exporters to sell very competitively and with huge volumes there ,creating extra pressure in the market.

We all know that the Central American crop is no good this time , Mexico and Guatemala are priced very high due to their crop damage and that can complex the situation further. Moreover most buyers did not have much old crop carry over as everyone expected prices to fall at the start of the new season , when prices opened at similar levels they waited for the correction which unfortunately never came.We believe that the stocks in Europe , US and other major countries is not enough for them to refrain them from re-entering the markets at some point soon.We understand that these high levels will take time to get accepted with the End users but with global food prices of nearly all commodities shooting up it shall be accepted sooner or later.Sometimes its not the question of price

but of requirement , ofcourse their will be a demand crop but that will inconsequential in comparison to the global shortfall.

Later in the season there is Ramadan early into the Year and the Chinese Olympics , going by past experience these

events do bring in optimistic and concentrated demand in the market as well and with no other origins coming out with new crops at that particular period we could see some eager buying.

Once again the rise and fall's will be in Quantums as we have been saying before.Corrections cannot be ruled out and they probably will happen many times , its upto the buyers to judge what the right levels are for them to enter the market and for a change have belief in their suppliers to judge the market and make their buying decision. More and more interaction with your suppliers will only help getting the right price and right quantity at the right time.Few decisions may go wrong but if you look at the long term picture it will only be benifitial.

If you remember what we said in our July report

QUOTE" in case our above findings are true we suggest that you hold on tight to your respective suppliers as this could be a bumpy year ahead .After years of sorting out of bad suppliers it could be year of sorting out of buyers this year round.You may get the price from time to time but not the desired quantity."UNQUOTE

Korean Tender 5000 Mt Oct/Market Report

The Korean tender of 5000 Mt for the Month of October was as expected awarded to India in the price range of USD 1107 - USD 1121.

There was negligible participation from the African Nations as their old stocks are as good as finished , however the big surprise was the

absence of a strong participation we usually see during this particular time from Pakistan.As we had mentioned in our previous report we

had heard about a weak crop in Pakistan , being in almost the same geographical location and having similar harvest cycle as Gujarat we

believed that there would have been similar damages to their crop as well , which seems evident from their lack of interest in Korean Tenders.

The new crop arrivals began earlier in October and picked up in quantum around mid of the month. With the last 2 weeks and the coming week

being Holy months in India, which are specially more avidly followed in U.P/M.P region we believed that the arrivals would pick up sooner or later.

However the patience of buyers and forward sellers ran out a little too early and the market has already seen a rise of about 12% from the lowest levels

where it started from.Buying pressure from day one also did not allow the markets to settle down at lower levels and it more or less picked up from the

last year end prices , whereas usually we have experienced a discount of about 8-10% on old crops closing prices in the past.

China factor despite mixed feeling is very much evident , it is now confirmed news that they do have a bad crop , many of us ofcourse will argue on

the size of reduction. The fact remains that they are consuming more and more every year ,that is the reason from a Exporting nation they have now

almost become a net Importing one, barring their trade with Japan and Korea. At conservative levels their crop damage of 30% amounts to about 200,000 Mt

which will definitely put pressure on global prices. Like we mentioned earlier it doesn't matter where they buy from , be it India , Myanmar or Africa that

quantity WILL TRAVEL East.They have supposedly bought quite a lot of cargo from India at low levels earlier in the season mainly due to the fact that

Africa will not be in the market till Dec End/Early. It's a global market now and news travels fast so if the Indian prices are on a high in Dec we see

no reason why our friends in Africa will panic and sell their merchandise at huge discounts as they would have good 10 more months to hold before any

other new crop arrives and a benchmark price from India to base on .Also this year keeping in mind that they finished their last crop in barely 8 months.

Mixed news about their crop ,but general feeling we've heard is of a good crop similar in size to last year.

We still believe that markets went up too much too quickly, however the arrivals surprisingly are not picking up and their is more of covering pressure

at the moment from the people who sold rather than of business being done at higher levels.Everyone again is waiting for prices to fall and that we have

seen in the past never works out well. As per our feeling market should provide a low level window to buy at low level , which we now think maynot be lower

than the levels the season started on. Moreover in the next 2 weeks the domestic demand picks up which always keeps the prices at check as in past.

We think in short term there is good buying opportunity till Mid Nov and for long term around Mid Jan after the African crop arrives but that ofcourse is subject

to how their crop is.

We have alredy seen Intraday jumps of 30-35$'s in the last week and we think this will be case all year , quantum drops and quantum jumps.

Finally in the last few days there has been Rumors that the Govt of India is likely to impose a Ban on Sesame Seeds, today we have that in Newspapers as well.

When and If that will happen remains a mystery.Technically this news should have taken the prices downwards but infact what seems to be happeing is that the spot buying has picked up in a frenzy as everyone is in a rush to get their cargo moved out in case of eventuality.If the ban happens what will happen?Markets in India will ofcourse crash , the seeds will go into crusing for oil but what good will than do to the buyers when we can't export , with India out ,China short and African crop still 2 months away we wonder what the situation will be like.

Korean Tender September 20th /Market Report September

The new crop Korean Tender was announced on the 20th and as expected the whole quantity of 4500 MT was awarded to India once again. The price range was in the $1025 - $1055 spectrum which is higher than most people actually anticipated.

The were very few African and Pakistani bids which can be due to the fact that African stocks are almost over and they are not expecting new crop before Jan-Feb 2008 and a similar situation for Pakistan as well , also the Pakistan crop is expected to be smaller than last year

mainly due to the fact that it is almost grown in the same climatic region as Gujarat which faced erratic climate this sowing season.

In all our previous reports we have repeated that the crop is delayed which is again holding true. Its almost end of September and the arrivals in Gujarat and Maharastra are barely exceeding a few hundred bags daily. In U.P and M.P the arrivals were barely 4-5 bags which commenced only last week,the seeds arrived are those that small farmers harvest early to clean up their farms and is of crushing grade with high moisture content.

Gujarat and Maharastra will have crops smaller than last year. Sowing area as well as yields per Hectare in these states have reduced substantially.

U.P , M.P and Rajasthan are heading for good crops .The sowing area has no doubt gone up.The areas under cultivation on an average has gone up by 30-40% as compared to last year , but the yield has dropped as some areas had excess rains at plantation stages which destroyed the sowing and also rain deficiency in certain areas at a later stage has affected the crop yield and quality. The quantity should be higher than last year by about 15-20%.This should cover up the losses made in other states and the overall quantity should be same or maybe just a little higher than last year , the last

crop barely lasted us 11 months as the current stocks are almost zero so the next should be just about enough as well keeping a tight demand-supply ratio all year.

The major factors to watch out this year should be the forward trade and the fact that most buyers are not holding big stocks and will need new crop merchandise at all costs as soon as possible. The fear as we have seen in the past is everyone suddenly stepping in to cover at the same time, this should keep the prices high. A lot of forward and speculative trade has happened in the last few weeks and the pipe lines in India are empty as well so we expect a mad rush for buying at the start of new crop. New crop in full swing is not expected before End Oct/Early November around and after the Indian festival of Diwali.

The freights as we all know have gone up almost 2.5 % as compared to last year levels and the US$ has gone down against the Indian Rupee by almost 14% now. Above that there is the rising costs of local transportation and High Interest rates.All these factors put together should keep the average levels high this season. However we feel that there will be windows to cover at attractive levels , everyone needs to stay in close contact with their suppliers as we don't expect that the low levels opportunities will be of longer durations.The price variations as in the past should be quantum and sudden in nature rather than a gradual so the important factor should be not getting the lowest price but maintaining a lowest average.

China crop is now confirmed to be around 40-45% short , which mean that irrespective of when they buy , "THEY WILL BUY". If not from India then from Africa , in either case they will push up the prices whenever they start buying and from what we know there is already a lot of trade inquires in the market for the new crop.

Korean Tender July 23rd.

The Korean tender for 6000 Mt was awarded today and as expected India managed to bag 5000 Mt at a price range of USD 1137-1143 , Pakistan was awarded the other 1000 Mt. Interestingly in contrast to expectations the African prices were seen ruling higher by 40-50$/MT . We believe the reason for the same is a confirmed Chinese crop failure, the total damage due to floods and crop shifting is expected to be in the range of 30-35% and going by previous trends African suppliers know they can always manage to fetch a better price in the Chinese market when their New Year demand starts and are not is a rush to sell at cheap levels as their new crop doesn't arrive until Feb/March 2008.

Indian crop is also not shaping out too well , Gujarat and Maharashtra will be lucky to have 50 % of what they had last year and the northern states of U.P,M.P and Rajasthan even with a big crop may at best substitute the gap , but even that depends on the rains which have dried up for the last 10-12 days and if it doesn't pick up again we may see some damage to the crop in U.P and M.P as well , atleast in terms of yield leading to lower volumes.The delay is inevitable now and we don't see new crop arriving in full swing before 2nd half October now.

MARKET REPORT JULY 12th

As expected the next Korean Tender for 6000 Mt was declared yesterday and will open on the 20th .Markets have been very volatile since the tender last month and there is no reason to believe that the volatility will not continue further after this one. We might have one last tender before the new crop arrives in September or Early October as well.

Now about the Rains and sowing , the monsoon rains have again been very erratic this year with huge uneven spread of showers.They were first late to reach respective areas and when they did arrive created havoc. Maharastra, Gujarat and southern Rajasthan have been very badly hit with heavy rains,floods and the problem got multiplied with a few big dams which broke and flooded entire villages.The reports that we have from various sources confirm that a very large areas under cultivation in these areas is hit badly. The small 60 days crop which comes out from this region is said to be completely wiped out, this crop although not big in size usually helps easing the buying pressure on the new crop arrivals which most likely will not be the case this year.

Initial estimates say that we could have a crop size of less than 50% in these areas as apart from the rain damage there has been a massive crop shifting towards groundnuts and cotton as evident from the crop size in last couple of years. Madhya Pradesh and Uttar Pradesh are likely to have a good crop, sowing patterns show a rise in area but the yield we believe will continues to remain low as farmers were noticed sowing the same seeds as last year.

However the MP and UP areas are also experiencing erratic rains with no rains for last 8-10 days in certain areas and heavy rainfall in some , at the moment the plants can still survive and resowing can be done if need be but the situation may change if this continues till this month end.

Overall one this is a certainty that new crop will not come out in any region before Mid October and if it does come earlier in smaller batches then that would only lead to panic buying and overall rise in prices by the time bulk quantities arrive.This means the cargo's will not touch respective destination in any case before Mid or end of November , now the question for buyers is "Do they have enough stock to last them till end of November", and even at that moment we are talking small quantities as the shippers will have to service all their clients and not just one.

We also noticed that the overseas markets are quite just because the prices are high , at 100$ cheap im sure anyone can sell any given quantity at the moment so there definitely is a demand undercurrent going on.

About 80% of the factories are shut down at the moment and waiting anxiously to buy raw material and to run their factories, pipe line for the old stock is empty , buyers who waited and waited for prices to fall were caught on the wrong foot and will be eager to buy as well , the domestic demand from India will pick up where one can fetch a high premium compared to export prices without much inspection hassles, stockiest will be lining up to fill their warehouses and the crop is LATE.

Africa will not come out with new crop until Feb-March and confirmed reports from China is that their sowing is down almost 30% again owing to a huge crop shifting to Cotton and Groundnut. We are not trying to scare or create a panic with our reports , if you have read our previous reports you would have noticed that we only try to bring to you the actual mood and sentiments on the Indian market through out wide network of farmers, traders, export fraternity and brokers.

U.P and M.P last year had a big crop but we've all seen that 9 months down the line we are out of stocks, if Gujarat,Maharastra and Rajasthan have smaller volumes then a bigger U.P and M.P crop will at most cover the gap more than anything else. What happens to the Chinese shortfall, the annual growth in demand and increasing pressure from the oil market sector ?

However its too early to assess the size and quantity of the crop , we may get a clearer picture by next month and we shall again send a report for the same,but just in case our above findings are true we suggest that you hold on tight to your respective suppliers as this could be a bumpy year ahead .After years of sorting out of bad suppliers it could be year of sorting out of buyers this year round.As we put in one of our previous reports , you may get the price from time to time but not the desired quantity.

Korean Tender , 11th June 2007

The Korean Tender announced earlier this month for 4000 Mt was declared today and India was awared all 4000 Mt . We did mention this in our

last Market Report dated June 4th.

QUOTE"If we go by previous trends and current price situation in Africa , India should once again be optimistic in getting a substantial quantity."

1000 Mt @ $1019 ( India)

500 Mt @ $1005 "

500 Mt @ $ 998 "

1000 Mt @ $ 996 "

1000 Mt @ $ 993 "

4000 Mt Total

Prices have been understandably lower compared to the last Tender of April due to slow demand but still in the same vicinity of March Tender levels , taking into account the rising Rupee. The levels of $ 1000 is still maintained and African and Pakistan prices are still hovering around $50-$60 above Indian prices so at root levels

prices are still holding a resistance mostly due to very limited stocks.

The USD continues to be weak globally and if experts are to be believed the Rupee is likely to strengthen further in the coming months.

Just a breif on the Indian Monsoon situation , the Rains have been confirmed delayed by atleast 1 week in main Sesame cultivation regions of Gujrat, MP , U.P

and Rajasthan. However a further delay of 10-12 days is likely if the rains do not reach Gujarat by end of this week. India for the first time in last 20 yrs is experiencing

very very hot summers with temp rising upto 46 Degree Centigrades in North and Central India.

News from China is that there are heavy rains in certain regions and no rains in some so their sowing has not commenced as well and the crop there as well may be

delayed by a few weeks. It is yet too early to comment weather there is any crop damage or not.

MARKET REPORT JUNE 4th

The much awaited Korean Tender has finally been declared for 4000 Mt and will open on 11th June. Since the last Tender which was announced on April 17th the markets have been very quite. If we go by previous trends and current price situation in Africa , India should once again be optimistic in getting a substantial quantity.

Monsoon as per govt data has touched Indian coasts on time so if all is well we may have rains in Maharastra and Gujarat by Mid of this month and in M .P and U.P by End of June/Early July. The sowing usually commences after the first rains, so with everything going as per schedule we should have new crop in the markets by End September/Early October ( Sesame is a 90 Days crop). This means that the new crop shipments would resume around Mid Oct and reach respective destinations by Early/Mid November. This gives India a good 150 days or 5 more months to work with old crop.

Markets in India have been surprisingly very quite , April/May are traditionally slow months with sluggish demand and this year is no different. The high and unstable prices has also resulted in less aggressive buying from all sectors. The port data however puts in a different picture , we compared the cumulative export data from all the ports and noticed that the actual shipments have fluctuated by merely 8-10% in the last 8 months ( Oct 06 - May 07) , which meansthat most buyers did buy/cover themselves for long term shipments in the earlier months when the prices were not at its peak.

We had pointed this our in our last report as one of the factor for price rise where a bulk of forward contracts were done in the markets in the months of Feb/March.

This also explains why the demand has been sluggish in the last 2 months,a lot of low prices cargo was being shipped which kept the prices at destination under check and the overseas local market did not move in tandem with Indian local prices.

Prices in the last 2 months have more or less moved sideways clearly reconfirming that the stocks are not big enough to create a widespread panic and the stockiest still believe that the demand would resume anytime soon. Current prices may seem high as compared to the season start but that is more due to the Rupee strengthening against the USD. The rupee has appreciated by about 11 % since the start of the season.

For example if we say someone has raw material stocks at oct levels he would have to add 10 % for 8 months as interest ( @ 15% Annually which is basic in India for private lending ) also added to this the warehousing,handling,weight reductions( due to moisture loss) say roughly 1.5% Per Month or 12% . Over and above this we have 11% appreciation of the USD so that makes it a total of 10% + 12% +11 % = 33%.

Taking all these factors into consideration we can understand why the market has shown resilience and not fallen much despite slow demand. At current prices the stockiest are barely cutting even on their stocks and hence are very apprehensive selling their stocks at any lower prices. The markets as be believe has now bottomed out and any further fall would probably end in stockiest holding back and not offering atall.

At the moment about 70% of all Hulling factories have taken a shut down and would resume only on new crop arrival now. Usually factories do not take a shut down if they have stocks left , the operational factories are also running mostly on end to end basis covering their sales and not holding excess merchandise. With atleast 4 more months before the new crop hits the market it would be interesting to see the situation then, as every factory would be eager to cover new crop as soon as possible and resume production. Even if there is slow demand now the stockiest know that the buyers will be without stocks by October and also cover aggressively when the season resumes.

The Ramadan demand as expected has not picked up yet but hopefully will happen by this month end.We have not yet heard or seen of any big stocks in the market and most smaller regional suppliers have almost Zero leftovers.We may have 1 or 2 more Korean tenders before October.

Interesting to see now is that weather the demand stays sluggish for the next 150 days or will the markets finally accept the fact that there is little to loose on current levels and resume buying.

We will keep you posted on the Korean Tender once it is announced.