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Wednesday, March 3, 2010
Monday, November 23, 2009
MARKET REPORT SESAME SEED NOV 23TH , 2009
What kind of world do we wake up to each morning these days? And how did we get here?
Good news ,we are getting used to price levels unheard of earlier. That is a good sign because high prices are the curefor high prices.Producers crippled by rising input and labor costs realize to their amazement they still have a market.
Once again its been a very strange start to the sesame season in India.Our initial estimated posted on the September 9th report of the crop being about 280,000 MT in stark contradiction to the market sentiments at that time seem to be more or less on target at the moment looking at the arrivals figures of past 1 month in India.
Just as we mentioned in the last report the crop was certainly late and although the prices did fall in anticipation of a good crop early in October the speculators and stockiest just went berserk suddenly by end of the month. It seems like the late crop arrival led to a lot of short covering which combined with the factors of lower arrivals , bullish sentiments of the stockiest , almost zero carry forward stocks apart from some in Gujarat region , weak USD,the crop delay in Africa,a very strong domestic demand which is likely to support the markets till Jan end and to top it all the announcement of Korean tender in the end of Oct all played their part in the sudden rise.
However all that is past and the big question now remains about the prices for next few months.I wish i knew the answer too. As you would notice from the above para there were a lot of factors put together that contributed to the price rise and in my personal opinion it would take just about the same number of factors to pull it down as well.Individual factors like lack of demand or a good African crop may bring the prices down a bit but they are bound to jump back from them quickly enough.
Now looking at the trigger points one by one
1:- Arrivals are unlikely to pick up in India anymore.If price was the factor farmers should have already brought in the cargo inhaste to the yards but they didn't. This could mean 2 things that either all the estimates are wrong and in reality the crop is not as big as estimated or the farmers will continue/prefer selling in small lots and are maintaining a benchmark price below which they will not sell.
2:- Although the domestic demand will drop drastically after Jan , by then it would have substantially finished a huge quantity from the market. We have always underestimated the domestic sesame consumption in India but in the last 2 yrs the market has seen and knows that the demand is steadily increasing.
3:- Stocking this year has happened at 4 different levels a:- Farmers b:-Middle man c:- Wholesaler/Stockiest d:- Manufacturer/Exporters
The different levels give that much more room and financial support to the market to avoid that sudden fall which we have seen in the past. Even if one levels panics there is another level to support the market.The problem in India is that with high prices govt has put a stock limit on most of the active commodities , Rice, Wheat , Sugar , Edible oil all have stock limit so there are more and more stockiest looking for newer and other commodities to stock and hoard. That means the crop is now divided into a lot of smaller parts which makes the fall pattern slower and rise patter more drastic.
4:- African crop, the biggest factor .Well in my opinion they have always been taken for granted by most buyers and I don't think that will be the trend in the coming future anymore.The crop in Sudan has been very actively consumed within the middle east itself , with Egypt emerging as its biggest buyer. Ethiopian seeds continue to enjoy their preferential status in China and with their superior taste/preference advantage should continue to be priced competitively.The Japanese buyer have been known to be very fond of the Nigerian seeds and although they are
not active in the market at the moment , its just a matter of time before they will step in and pick up the south American and Nigerian crops in a frenzy. All other African nations usually follow the price trends in the " BIG 3 "and mark their prices accordingly.
5:- Korean Tender...We've already seen Africa pricing themselves above India in the last Korean Tender and despite a rebidding they were not very active in it.I think with all the banking,shipping and quality constrains of Korean Tender , India will continue to be its biggest bidder. That means about 40-50,000 MT Natural Sesame from India in the coming 10 months is set aside just for that.
6:- Chinese demand is unlikely to come to India at these high levels which means they will do all their shopping in Africa, and despite the fact that they have a good crop they will shop for sure.Myanmar crop is down about 40% and that means the 100,000 Mt which Myanmar supplied to China is no longer available and although not all 100,000 will be needed but that still means that China will have to look elsewhere to substitute a part of that quantity.
7:- South American crop is estimated to be of the same size if not smaller and just like last year they will continue to feed their own niche market without much surplus to impact prices in India and Africa.
8:- The USD is also unlike to regain past levels. Currently 1USD = 46.40 INR.
We still believe there is a huge psychological resistance at $1750 FOB for Hulled from the sellers point of view and on the upside at $1950 from the buyers point of view. In Natural the levels seem be at $ 1450 FOB and $ 1650 FOB respectively.It remains an open secret that the buyers are short and they have to resume buying at some point and the market here seem to be waiting just for that.
Ofcourse we will see dips from time to time on profit bookings and as always we sincerely suggest the buyers to take advantage of the dips and try to make an average rather than waiting for the absolute bottom before stepping as that bottom may be impossible to judge in this volatile market.We agree that most buyers think that this is another bubble and may burst anytime but sitting on the shore waiting and watching will be no good either , the best way forward to accept the fact that volatility is here to stay and we all have to learn to live with it.
No one expect and predicted India's shift from being a rice exporter to a rice importer ,this has been triggered by concern India may itself be running short of this daily staple.India, a low-cost producer and among the top three exporters of rice in the world, will continue to export premium basmati rice, which is beyond the budget of most families.All this doesn't make sense does it? But these are bitter facts.
India should continue to be a force as far as Hulled Sesame is concerned, the domestic market is growing and developing rapidly just as it did in china a few yrs ago.All of us forget that fact that even 10 yrs ago when India was exporting less than 200,000 Mt of Sesame (Hulled/Natural)combined it was still consuming the balance 400,000 it produced domestically.The only difference is that at that point the domestic consumption was price
driven while the current consumption is a combination of price and changing eating habits.Sesame oil in India has moved up from being a cheap mixing option in Edible oil to a self standing commodity.
Even so, bread, buns , burgers and bagels are foods that we choose to eat. They are not as critical for our health and survival as Lentils and vegetable.Or so we thought. Not anymore. The Indian consumer remains willing and able to buy them directly or consume them through processed foods without much outcry. Sure, a few families will cut back. But not so you would notice. Our new food choices are here to stay.
Saturday, October 3, 2009
ANUGA
WE CORDIALLY INVITE YOU TO VISIT US AT ANUGA,COLOGNE.
OCT 10th-14th , HALL 1.1 BOOTH F 039a. INDIA PAVILION.
Wednesday, September 9, 2009
MARKET REPORT SESAME SEED SEPT 9TH , 2009
However this year we think the whole crop is delayed by about 2 weeks so we don't see the arrival pressure's building before Mid of October or also possibly by 2nd half October as the Diwali festival in India is on the 17th Oct and farmers and traders are usually on a week's break during this festive period.
The crop situation has thankfully improved a lot over the past 2 weeks as compared to what it was perceived in early August with a very bad monsoon situation.In certain areas the drought is still very severe and we expect crop failure's in those areas, these area mainly fall in the Rajasthan/U.P/M.P border region.
The sowing this year started a little late and then we saw a big gap between the rains, some areas were able to sustain this period and with the rains back now we hope all will be alright.The only doubt that remains is a situation like last year where late rains resulted
in a huge crop damage at the time of harvest.
in a huge crop damage at the time of harvest.
As of now from what we have heard and seen , India's crop distribution should be as follows
--------------------------------------------------------------------------------
--------------------------------2008 Crop----------2009 Crop Estimates (Mts)
--------------------------------------------------------------------------------
U.P/MP-------------------- 85,000 MT ---------- 130,000 MT
--------------------------------------------------------------------------------
Rajasthan----------------- 90,000 MT---------- 80,000 MT
Rajasthan----------------- 90,000 MT---------- 80,000 MT
--------------------------------------------------------------------------------
Gujrat ---------------------- 60,000 MT---------- 60,000 MT
Gujrat ---------------------- 60,000 MT---------- 60,000 MT
--------------------------------------------------------------------------------
Others--------------------- 10,000 MT---------- 10,000 MT
Others--------------------- 10,000 MT---------- 10,000 MT
--------------------------------------------------------------------------------
Total -----------------------245,000 MT---------- 280,00 MT
Last year old crop is almost zero with only limited stocks available due to the bumper Summer crop we had in Gujarat earlier this year. Taking this into account we assume that market should remain stable this year at some lower levels , but this will again all depend on the Chinese demand and African crop which come out in Nov end/Dec this year.
Chinese are said to be having a good crop this year but as a fact we all know they will still need more than they can produce and will certainly buy from cheaper origins whenever possible.
Once again as you know in India things are a little different and we tend to overreact most of the time , ignoring smaller details and reacting in haste. We have already seen some low prices offers going out of India in the last 2 weeks after news of a good crop started to spread around but we still advice the buyers to be patient and not promote speculations as these speculators will then jump to buy in at the very arrival of new crop and give support to prices as they did last year.Which would eventually mean that prices may not actually fall as much as they should in the start of the season and will fall after these buyers cover themselves putting everyone in a bad position.
I'll keep this report short this time and hope to give in more details and numbers by the month end .
Please feel free to ask anymore questions that you may have.We also look forward to seeing you at our booth in Anuga next month.
WE CORDIALLY INVITE YOU TO VISIT US AT ANUGA,COLOGNE. OCT 10th-14th , HALL 1.1 BOOTH F 039a. INDIA PAVILION.
Kind Regards,
Mukul Gupta
C.E.O/Director
Shakumbhri Expo Impo Ltd,
4.5 Km Bhopa Road ,Muzaffarnagar , Uttar Pradesh , India , Pin - 251001.
Ph :- 91 131 2990062,2615164 , Fax:- 91 131 2615165 , Mob:- 91 9837084355
Website :- www.shakumbhri.org
Email :- mukul@shakumbhri.org
Email :- mugupta@hotmail.com
Skype :- mukulgupta78
C.E.O/Director
Shakumbhri Expo Impo Ltd,
4.5 Km Bhopa Road ,Muzaffarnagar , Uttar Pradesh , India , Pin - 251001.
Ph :- 91 131 2990062,2615164 , Fax:- 91 131 2615165 , Mob:- 91 9837084355
Website :- www.shakumbhri.org
Email :- mukul@shakumbhri.org
Email :- mugupta@hotmail.com
Skype :- mukulgupta78
Friday, August 7, 2009
Latest rainfall map for India, as you can see there is a very uneven rain distribution all over the country and while some would argue that less rains are good for sesame it seems like not just sesame but all other crops will be affected with this unusual rainfall and if less rain are considered as the barometer for a good crop we can safely say goodbye to the Gujrat crop where rainfall is much more than average.
Tuesday, July 7, 2009
MARKET REPORT SESAME SEED JULY 7TH , 2009
2008 was a rotten year for food prices. Prices climbed so high that very few could eat as well as they might have. 2009 in reverse has been a year of slow but steady consolidation. Prices have dropped but not crashed, food is cheaper again but still not back to the lows seen 2 years ago.
After a very boring season we are finally entering into the exciting time of the year. This is the time when people start throwing in their opinions , numbers for new crop quantity and some even speculative prices for the new season.
Just as we mentioned in our last report the price remains range bound in India with almost a very clear resistance level both on the upside and at the bottom. The volumes have dropped drastically, China and Turkey dont seem to be very active buying but still prices manage to hold firm. The Gujarat Summer crop was said to be 80,000 Mt and considering the daily arrival figures of the past 2 months and current arrival figures it might reach round 65,000-70,000 Mt if not 80,000 Mt. Which is still a very huge quantity for summer crop, but even that did not bring the market down crashing as everyone thought it would.
1:- The Summer crop arrival figures reflect that almost 45-50,000 Mt crop is already out in the market till date.
2:- Out of which we believe about 15,000 was used for the Korean Tender , another 15-20,000 Mt probably for Exports both Natural and Hulled combined.
3:- About 5,000 was consumed domestically.
4:- That means the stocks in our opinion should not be more than 10,000 Mt at most with stockists and Exporters.The Stocks would probably be used up if and when the next Korean Tender is announced or exported elsewhere.U.P/M.P stocks are almost negligible at the moment , I personally would'nt put them more than 1000-2000 Mt and for Rajasthan about 3000-4000 Mt at max.These stocks are spread over so many stockist that they would hardly create a ripple effect in the market even if we start to see some price decline in the coming months.
The current arrivals in Gujarat are down to 100-150 Mt per day and that should continue to serve the day to day requirement of the Hulling factories,domestic consumptions and spot demand for the next 1-2 months.
Now to the interesting part. It finally rained in Delhi/Mumbai this week.
"Delayed monsoons was the big media story only until it didn't rain in Mumbai. Now that it has started raining there, the monsoon story is suddenly over ..... or is it ? We don't grown sesame in Delhi and Mumbai and the news doesn't cover the villages that frantically."Touche :)
Monsoon is late and slow this year and thats a fact.Sesame as we know is a 90 days crop .Traditionally the Gujarat/Maharastra new crop comes out by end of September and other regions i.e U.P/M.P and Rajasthan 2 weeks later i.e by Early October. However this season due the delayed monsoon , Gujarat/Maharastra got their first rains in the last week of june and the sowing started in first week of July and is unlikely to finish before the 3rd week of July and in other regions it has not even commenced fully as yet, at best about 20-23% sowing estimated in some irrigated areas.
This means that the Gujarat new crop is unlikely to come out before first week on October and since Diwali is on 17th Oct this year the farmers traditonally do not get the crop into their market in a frenzy during that week so the arrivals will pick up only around End October. The new crop is unlikely to reach respective destinations before Early November/Mid November and the big question is that do the buyer's have enough stocks to sustain till that long?
All said , we are not very concerned about the 2 weeks delay , that is manageable. The concern is that the rains are still not favorable in most regions. It rained for a few days and the rains are gone again which is definitely not enough for any crop including sesame and the worst is that the Indian Meteorological Department still says that we will have a good monsoon which means that the spread of rains is now concentrated over the next 2 months which is not good news specially for a crop like sesame.
The seeds can do with little rains but if we have a situation like last year when it rained too much at the wrong time we might have a big problem on our hands.The acerage of sesame is bound to go up even this year as the farmers have been getting very good price for their products over the past 3 years and that should be an encouraging fact for them.However last years disaster has prompted a lot of farmers to go in for dual crop , one which requires more water and the other drought resistance to safeguard their interest.
African stocks are heard to be limited as well and should be enough to sustain the Ramadan demand. A few African countries Tanzania, Mozambique will now have new harvest season.China we believe despite their big crop will continue to remain a net importer and Japanese demand which was slow this year due to the very large quantity and long term contracts they entered into last season will expire and they are heard to be running on low inventories as well.
In Ethiopia most inventory is in traders' hand, farmers have a small number of goods. The majority of local traders believe that the total inventory is in 25,000 tons level and some local traders think that the total inventory is 40,000 tons to 45,000 tons. Stocks in Sudan are also not estimated to be very large and with their new crop still 5 months away i.e End Nov/Dec the chances of prices falling there are slim too.
This year high prices in India diverted a lot of quantities and buyers to Africa.Even India is supposed to have imported more than 5000 Mt of African Sesame at lower levels, is this the sigh of things to come. Is India going the china way? We know for a fact now that at high levels demand will suffer from India.
Taking away the demand at higher levels which was evident this season, in the long run will only help sesame because the market will adjust and naturally correct itself. Sesame is a large cash crop in India, we produce about 700,000 Mt annually and export about 30% out of it obviously consuming the rest.Like China the domestic demand is getting bigger and bigger each year along with the exports. And for sesame India is the world’s biggest exporter ,2nd largest producer, 4th largest consumer . Surely, it should learn to stand on its own feet. We have had a large exportable surplus for the last two years because sesame seed production has outpaced our capacity to hull or export.
What will happen if there are less exports? There is every chance local prices will crash due to oversupply, creating misery for farmers. Second, since domestic prices will crash, local crushing mills will have a bonanza. Their raw material would become substantially cheaper with no rival bids from exporters.The cheaper oil then finds its way into the already established edible oil sector for direct or blending purpose. This oversupply problem would, however, only happen for one season. In the next season, farmers will stay away from sesame, they won’t touch a crop for which there are no takers. The oversupply situation would correct itself and once again there would be a balance between demand and supply. The sesame industry will discover it was a phyrric victory.
More broadly, a reduction in India’s crop would reduce the global availability of sesame drastically. Demand for sesame seed internationally would also recover as the world economy gets back on its feet. That would push up world prices, creating an opportunity for Indian exporters once again. In other words, if there is no artificial prop for exports, by 2010 India’s sesame prices would correct itself with new price equilibrium.
The bad news is that 2009 will be tough. There would be plenty of tears, recriminations and guilt. Farmers are planting the 2009 crop on the basis of the fantastic price they got in 2008 from exporters and stockist.They made good sales in the past 2 yrs and are now financially in a better position to bargain a little, they showed that all this season by holding back whenever they thought prices were following.Can they do it again this season?
Its still too early to comment or predict where the prices will be 2-3 months from now.We still hope that India has a good crop, prices reach a balance which is good both
for the consumers and the farmers and we see renewed demand once again.Larger crops mean greater liquidity and depth in the physical as well futures markets, bigger corporate players and more investment in forward and backward linkages. All this to me appears like a definite thumbs up for the commodity markets in India.
Let's say cheers to that and hope that banks actually have the money to lend.
After a very boring season we are finally entering into the exciting time of the year. This is the time when people start throwing in their opinions , numbers for new crop quantity and some even speculative prices for the new season.
Just as we mentioned in our last report the price remains range bound in India with almost a very clear resistance level both on the upside and at the bottom. The volumes have dropped drastically, China and Turkey dont seem to be very active buying but still prices manage to hold firm. The Gujarat Summer crop was said to be 80,000 Mt and considering the daily arrival figures of the past 2 months and current arrival figures it might reach round 65,000-70,000 Mt if not 80,000 Mt. Which is still a very huge quantity for summer crop, but even that did not bring the market down crashing as everyone thought it would.
1:- The Summer crop arrival figures reflect that almost 45-50,000 Mt crop is already out in the market till date.
2:- Out of which we believe about 15,000 was used for the Korean Tender , another 15-20,000 Mt probably for Exports both Natural and Hulled combined.
3:- About 5,000 was consumed domestically.
4:- That means the stocks in our opinion should not be more than 10,000 Mt at most with stockists and Exporters.The Stocks would probably be used up if and when the next Korean Tender is announced or exported elsewhere.U.P/M.P stocks are almost negligible at the moment , I personally would'nt put them more than 1000-2000 Mt and for Rajasthan about 3000-4000 Mt at max.These stocks are spread over so many stockist that they would hardly create a ripple effect in the market even if we start to see some price decline in the coming months.
The current arrivals in Gujarat are down to 100-150 Mt per day and that should continue to serve the day to day requirement of the Hulling factories,domestic consumptions and spot demand for the next 1-2 months.
Now to the interesting part. It finally rained in Delhi/Mumbai this week.
"Delayed monsoons was the big media story only until it didn't rain in Mumbai. Now that it has started raining there, the monsoon story is suddenly over ..... or is it ? We don't grown sesame in Delhi and Mumbai and the news doesn't cover the villages that frantically."Touche :)
Monsoon is late and slow this year and thats a fact.Sesame as we know is a 90 days crop .Traditionally the Gujarat/Maharastra new crop comes out by end of September and other regions i.e U.P/M.P and Rajasthan 2 weeks later i.e by Early October. However this season due the delayed monsoon , Gujarat/Maharastra got their first rains in the last week of june and the sowing started in first week of July and is unlikely to finish before the 3rd week of July and in other regions it has not even commenced fully as yet, at best about 20-23% sowing estimated in some irrigated areas.
This means that the Gujarat new crop is unlikely to come out before first week on October and since Diwali is on 17th Oct this year the farmers traditonally do not get the crop into their market in a frenzy during that week so the arrivals will pick up only around End October. The new crop is unlikely to reach respective destinations before Early November/Mid November and the big question is that do the buyer's have enough stocks to sustain till that long?
All said , we are not very concerned about the 2 weeks delay , that is manageable. The concern is that the rains are still not favorable in most regions. It rained for a few days and the rains are gone again which is definitely not enough for any crop including sesame and the worst is that the Indian Meteorological Department still says that we will have a good monsoon which means that the spread of rains is now concentrated over the next 2 months which is not good news specially for a crop like sesame.
The seeds can do with little rains but if we have a situation like last year when it rained too much at the wrong time we might have a big problem on our hands.The acerage of sesame is bound to go up even this year as the farmers have been getting very good price for their products over the past 3 years and that should be an encouraging fact for them.However last years disaster has prompted a lot of farmers to go in for dual crop , one which requires more water and the other drought resistance to safeguard their interest.
African stocks are heard to be limited as well and should be enough to sustain the Ramadan demand. A few African countries Tanzania, Mozambique will now have new harvest season.China we believe despite their big crop will continue to remain a net importer and Japanese demand which was slow this year due to the very large quantity and long term contracts they entered into last season will expire and they are heard to be running on low inventories as well.
In Ethiopia most inventory is in traders' hand, farmers have a small number of goods. The majority of local traders believe that the total inventory is in 25,000 tons level and some local traders think that the total inventory is 40,000 tons to 45,000 tons. Stocks in Sudan are also not estimated to be very large and with their new crop still 5 months away i.e End Nov/Dec the chances of prices falling there are slim too.
This year high prices in India diverted a lot of quantities and buyers to Africa.Even India is supposed to have imported more than 5000 Mt of African Sesame at lower levels, is this the sigh of things to come. Is India going the china way? We know for a fact now that at high levels demand will suffer from India.
Taking away the demand at higher levels which was evident this season, in the long run will only help sesame because the market will adjust and naturally correct itself. Sesame is a large cash crop in India, we produce about 700,000 Mt annually and export about 30% out of it obviously consuming the rest.Like China the domestic demand is getting bigger and bigger each year along with the exports. And for sesame India is the world’s biggest exporter ,2nd largest producer, 4th largest consumer . Surely, it should learn to stand on its own feet. We have had a large exportable surplus for the last two years because sesame seed production has outpaced our capacity to hull or export.
What will happen if there are less exports? There is every chance local prices will crash due to oversupply, creating misery for farmers. Second, since domestic prices will crash, local crushing mills will have a bonanza. Their raw material would become substantially cheaper with no rival bids from exporters.The cheaper oil then finds its way into the already established edible oil sector for direct or blending purpose. This oversupply problem would, however, only happen for one season. In the next season, farmers will stay away from sesame, they won’t touch a crop for which there are no takers. The oversupply situation would correct itself and once again there would be a balance between demand and supply. The sesame industry will discover it was a phyrric victory.
More broadly, a reduction in India’s crop would reduce the global availability of sesame drastically. Demand for sesame seed internationally would also recover as the world economy gets back on its feet. That would push up world prices, creating an opportunity for Indian exporters once again. In other words, if there is no artificial prop for exports, by 2010 India’s sesame prices would correct itself with new price equilibrium.
The bad news is that 2009 will be tough. There would be plenty of tears, recriminations and guilt. Farmers are planting the 2009 crop on the basis of the fantastic price they got in 2008 from exporters and stockist.They made good sales in the past 2 yrs and are now financially in a better position to bargain a little, they showed that all this season by holding back whenever they thought prices were following.Can they do it again this season?
Its still too early to comment or predict where the prices will be 2-3 months from now.We still hope that India has a good crop, prices reach a balance which is good both
for the consumers and the farmers and we see renewed demand once again.Larger crops mean greater liquidity and depth in the physical as well futures markets, bigger corporate players and more investment in forward and backward linkages. All this to me appears like a definite thumbs up for the commodity markets in India.
Let's say cheers to that and hope that banks actually have the money to lend.
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