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.

KOREAN TENDER MARKET REPORT 17th APRIL

The new Korean Tender after a delay of 2 weeks is finally declared today. Although the quantity was

reduced to 4000 MT from the initial expectations of 5000 Mt , India still managed to bag 3000 Mt as anticipated

and about $ 120 (Average) higher as compared to last tender declared on March 5th. This clearly indicates that

Africa is still expensive as compared to other origins and may continue to be as their crop size is nowhere near normal.

1000 Mt @ $1042 ( India)

500 Mt @ $1038 "

500 Mt @ $1048 "

500 Mt @ $1042 "

500 Mt @ $1047 "

1000 Mt @ $1035 (Pakistan)

4000 Mt Total

Interestingly if you look at our last reports of March 5th you will notice we mentioned about this price rise as follows.

QUOTE "If we take the Korean Tender and African Prices as benchmark , it still leaves India a whooping $100 cheaper and that much more window to increase at the least in the coming months." UNQUOTE

We did see a panic situation in March which took the prices even higher than expected, to levels which were definitely not sustainable as the prices shot up too much too quickly , from what we saw the prices were being governed by 3 major factors :

A ) Forward selling by both Exporters and Importers to their respective clients which needed to be covered and as the prices started to rise it created a panic situation.

B) Genuine reason that the arrivals virtually stopped at farm level creating a short supply and as a general rule the stockiest came into play.This factor still remains valid as the material in the market is now barely enough to sustain a normal Export demand of about 100,000 MT for the six month period April-September from India.

C) All the global crops which are supposed to create supply pressure during Feb/Mar ( Africa & S.America) failed to do so as none had a normal crop , irrespective of the prices it is still a fact that none of the origins have a big crop and as the earliest new crop is still a good 5 months away ( China comes out first in September) we expect the volatility in the prices will stay.

The Indian market needed a correction and that is exactly what has happened in the last 2 weeks, however most of its effect is diluted by the big fall in USD against Indian Currency. The Rupee is at its 9 year highest levels against the USD which makes things that much more complicated for exports. Since the start of the season itself we have seen the $ fall by as much as 8%.

We have time and again repeated that despite the rising price there will be some opening which would allow a good bargain , from what we see that now is the time to keep a close watch and also not a bad time to cover and make a good average base for the coming 5 months.

The likely demand for Ramadan and from China is still a major factor and once that happens it could create a similar situation as last month where everyone waited and waited and then stepped into the market all at the same time. The markets are now at a very sensitive stage and any small indication of demand will definitely push up prices to it is advisable to step in slowly and quietly.

As the prices have gone up almost 30% from season start level it is more likely that the stockiest are sitting on merchandise which is purely their profit having recovered their principle amounts by disposing 60-70% of the total , this gives them enough liquidity and financial strength to hold on to the little they are left with and not offer huge bargains. As on date as well with falling prices it would not be possible to get out bigger volumes at similar levels , just as we said in our last reports that at some stage you may have the desired price but not the desired quantities.

Short supply in the market at the moment , arrivals stopped last month and withprices rising suddenly there was lot of buying ,prices have risen by almost 40% since the start of season and almost all stockiest made money which has given them enough liquidity strength to now hold on to whatever little stocks they are left with , so unless there is some drastic change we do not see the markets falling by much.

Currently the markets are quite , mostly due to lack of demand owing to the long Easter holidays , there is

however a Korean Tender of 4000 MT to be declared next week on 17th April , if India once again gets this we may see

another jump.