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.

Gujrat has had the driest March/April and there is almost a drought like situation there.

Korean Tender- April 27th , 2009

As most of you would already be aware by now that a Korean Tender for Natural Sesame Seed was announced last week on the 24th.

India got 4800 MT in the range $1343 PMT - $1363 PMT. The balance 1200 Mt was awarded to Pakistan.Once again notable absence of African participation. The prices in Africa as still on the higher levels and with limited stocks there are well they do not seem to be in a hurry to sell cheap, specially when they know the fact that any revival of demand from China or the Ramadan demand has to be catered by them as no other origin is in a position to offer huge quantities.

The tender price is very smartly based on the anticipation of a good summer crop in India , as these levels do not match the current prices in the market we doubt that it was a discounted sale of stocks. The new summer crop arrivals should start to trickle in the first week of May and as the arrival pressure pick up we should see some price corrections. However we don't expect a free fall in prices in May as the initial arrival pressure will be eased with the buying for the Korean Tender which needs to sail out by next month end.

Everyone is now talking about a big summer crop , but as we mentioned in our previous reports the stock situation other than the Summer crop is very small. Everyone is waiting and counting on the summer crop and that optimism should act as a potential barrier in free fall of prices.

Moreover African exporters seem to be in no mood of offering a huge discount anytime soon and that could help keep international price level at sustainable levels.

A few more Korean tender will surely be announced before the Indian new crop in September and that means at

conservative levels about 15,000 Mt ( Including the current tender )from the summer crop will be dedicated to the

Korean tender alone.Which leaves us with about 25-30,000 Mt at max for rest of the worlds supply.However with

current demand at historical lows we still do not see any huge buying rush specially in the summer months.

Its been a boring year , just as we anticipated in our report at the start of season in November.There seems no reason that the next 4-5 months will be any different.However the buyers should be careful as ultimately the end users are consuming , if they are not supplying then probably their competition is.

If price is a deterrent in the sesame consumption , then I am hopeful that people will either learn to live with the high levels or the prices will fall in the coming new season in October. If other substitutes have replaced the use of sesame due to low prices will have lower cushion for a fall compared to sesame and that means at lower levels sesame will not just regain it demand but should also take market share of other substitutes just as they have taken its.

Prices of most food commodities, already up by a fifth in past over a month, are bound to climb as the global economy heads for a recovery. Though the prices of most industrial commodities have fallen on year, prices of food commodities like sugar, edible oil,pulses, fruits prices saw a sharper rise, pinching consumers.

What has been interesting this year is that the market has been very range bound , moving 3 steps forward and

then 2 steps back , the same story should continue in the coming months as well. This should bring stability to the prices and with a narrow band to move in the client confidence should resume and we hope to see some cheer back in the market.

Will be very interesting to see the actual size and impact of the summer crop in the coming few weeks.

USD still remains a major price determining factor as we have noticed in the recent past..

MARKET REPORT - APRIL 2nd , 2009

In continuation to my last report , prices have maintained their lateral movement in the past 2 months since our last reportof end January. Contrary to many people's thought of a market crash we thought that their were certain factors which provided stiff resistance at lower levels.

The prices did go up however do the same factors but the strong USD which traded in the range of about Rs 52.00 = 1USD in comparison to the Oct- Jan average of about Rs 49.00 =1 USD helped make the prices look that much cheaper.The USD in the past 2 weeks has weakened again and is now trading in the range of Rs 50-50.50 =1 USD which again makes the same prices as 2 weeks ago look 3-4 % expensive.

If February a small Korean tender helped move the prices up suddenly even though the bidding prices from India were below everyone's expectation. But once again the absence of competitive prices from Africa which is confirmed to have good big volume crop this year prompted everyone here that there was still scope of absorbing a $100-$200 rise in the international market.

China everyone said will not be buying this year and infact they bought very little since the season started in October,

but as we mentioned in our last report that China may be back for shopping after their major demand period of Chinese New Year got over. The strong buying spree from China in Feb got the prices moving up in Africa as well and after a certain level the demand stopped , clearly showing that the markets this year are very range bound.

Talking to a few of my Chinese colleagues , I learnt that the demand is slow but not down and out in the Sesame Oil business, ofcourse with high prices a certain segment of buyers have switched over but the fact remains that "Nothing is Permanent , not even CHANGE". People switch and then they switch back. A very interesting point as despite this talk of global slowdown and falling commodity prices , the prices of 90% of food items have still not been able to see the lows of late 2007 when this sudden and maddening rise of prices started.

We have all heard of low stocks in India for the last 5 months , low inventory , stocks in the hand of strong stockholders ,stocks at high levels are old topics now. The current buzz word in India nowadays is the Summer crop. I am sure their are all kind of figures already in the market about the size of the summer crop.I've heard estimated ranging from 50,000/Mt to our estimates of about 20,000 MT.

Working of some figures again. Considering that average yield per hectare in Gujarat for Sesame is about 400 Kgs/Hectare that means we need about 2.5 Hectare for 1 Mt of Sesame Seed. For a crop size of 50,000 Mt we would need a total area under cultivation of 2.5 X 50,000 = 125,000 Hectare. This figure looks a little unrealistic as compared to the normal sowing area under production in Gujarat which is about 350,000 Hectare.

Since there have been almost zero rains in Gujarat since Jan 2009 upto March 31st 2009 , some people may argue that summer crop is primarily sown in Irrigated lands with little or no dependence on Rainfall as in the case of normal season crop which is sown in June/July after the first monsoon rains in India.However being situated in a farm area we think we know a little more that people sitting in big cities that such a huge area in India to be cultivated by irrigation is close to impossible and that too for such a high risk and sensitive crop.

In our estimate the crop should be more or less similar in size to previous years with a little sustainable growth pattern and should be the range of 20,000- 25,000 MT. We must also recognize the fact that all of this is not for hulling. This crop will get divided into 3 parts

1:- 99/1 Premium Grade for Natural Export

2:- Hulling Quality

3:- Crushing Grade

Even if we take an average of what other say i.e about 50,000 Mt and our figures of 25,000 Mt , the crop will be around 35,000 Mt.

Lets say the Hulling grade in this is more 50% or about 20,000 Mt . Assuming that only 10 factories(Big small , Auto/Sundry put together ) will run for the next five months from May-September i.e about 150 days.Taking into consideration that the demand is down and there is a major slow down the factories are bound to run at about 60% capacity or lets say they will produce for only 100 days in the next coming 5 months.

10 Factories X 20 Mt Day X 100 Days = 20,000 MT . i.e they will need about 20% more in terms of raw material which means the 10 factories between them will consume about 24,000 Mt.

If less than 10 factories operate out of India , then doesn't that create a situation where the suppliers will have an upper hand in determining the prices and choosing the buyers anyways.If 10 or more factories run even at 60% capacity doesn't that account for this summer crop figure in total.In both cases we see a bottom line resistance being formed.

Where is the spare quantity to pressurize the market to crash? Its not that India needs to finish every last seed before the new crop as a compulsory rule or law.Every year we have carry forward , nothing new if we carry fwd 5-10,000 Mt.

Comparing previous years figures , India generally exports about 80,000 MT in the period April- September , last year i.e April 08- Sep-08 was about 107,000 Mt .Let me know If you need country wise import figures for this period of last 4 years.

Even if this year the April-September figures are down 50 % on low demand , we still would need about 50,000 Mt. We don't see a huge stock situation in India at the moment as even after the price rise in the past month the arrivals did not pick up , some people would say that the stockiest are awaiting for even better prices which may be true in some cases but what is also true is the fact that most stockiest have emptied their warehouse cutting their losses and gearing up for other new crops.After the sudden rise we even saw a 6-7% price correction but even then there was no panic selling by stockiest and no improvement in prices clearly showing that the supply is very very limited.

If all the overseas buyers are running in limited stocks and the demand has been slow over the past 6 months , I think the stockiest in India have been just as smart to realize that fact as well and there is no reason to assume that the stockiest will still hold on to huge stocks and loose their night sleep and money despite getting a chance to exit at breakeven or even at small profits in some cases over the last few weeks.

Some new origins in Africa and Central America will also be coming out with new crop in the coming 2 months but with the strong USD still trading above Rs 50 - 1 USD and at high prices worldwide the import parity and chances of India importing any more raw material is virtually zero. Hulled Sesame from India still remains the cheapest and limited.

Just as we anticipated a Chinese demand after their New year , we anticipate another buying spree from the Middle Eastern Countries and Turkey for their Ramadan demand which falls in August this year much before Indian new crop so all their demand will either be fulfilled by stocks in Africa or Indian Summer crop.

As per our estimates the markets should remain range bound in the next 5-6 months with strong resistance at price of $ 1650 PMT FOB on the lower side and $1850 PMT FOB on the upper side in case of Hulled Sesame. In case of Natural Sesame we see strong resistance at bottom levels of $1400 PMT FOB and $ 1550 PMT FOB.

However the USD still remains a major price determining factor and any downward movement from current highs will only make matters worse.

Sesame Seed Market Report Jan 27th 2009.

As most people would agree it has indeed been a very strange year for Sesame Seeds.2008 started with extreme bullishness and is strangely ended in the exact opposite note.However the troubled world economy and the weak sentiments has a large contribution to this as well.

Since our last report where we mentioned that there might be resistance at lower levels has proved right.We did touch the season's lowest and have bounced back as well. As we have been pointing since the start of the season the USD is playing a very prominent role this year.In Mid November the Rupee was trading at Rs.48- Rs 48.50 to a USD range , by the end of November/Early Dec it once again peaked to Rs 50.40 levels and continues to remain in the band of Rs 48-48.75 ever since.

From the last Korean Tender India bagged a sizeable quantity despite a huge price differential between the Indian and African prices. This clearly imply that price is not always the factor that determines the buying decisions and India should continue to keep that logistical and delivery advantage in future as well.Although it would be unfair on our part to say this but there is still a lot of insecurity and apprehension among a lot of buyers while buying from Africa due to their past record of defaults and quality.

In terms of Indian prospective even though the quantity was less but it still gave some support to the markets at lower levels and clearly implies the situation here.Although it is absolutely impossible to predict the exact crop quantities in India,Africa and China but since everyone in the trade including farmers, traders and exporters have now come to a conclusion that the total crop in India is at best between 200,000 MT to 210,000 MT.

However this year everyone is talking about Africa more than the Indian price's and rightly so.They have the biggest crop and in eventuality of a demand revival will be the only source which can cater to bulk quantities.The prices started coming out of Africa in November. Nigeria,Ethiopia and Sudan all started to quote really competitive prices and that literally confused the entire sesame trading community including the Indian exporters. At one stage the price difference in India and Africa was almost $400/Mt which prompted some Indian companies to look at the option of Importing the seeds from Africa.This situation however did not persist for long as the strong USD and steady price fall in Indian prices ultimately made the imports un-viable.

However there is confirmed news that India has bought about 5000 MT from Africa most of which was to cover their back to back sales.Turkey and China which last year bought huge quantities from India have done so from Africa this year and that is the reason the African prices have moved in a short band of $50-$100 over the past 3 month.

An interesting situation in India is that the Export is down by almost 50% YoY basis.If the USD and ocean freights were still at last years levels the prices would seem 20-25% i.e well above $2000 FOB PMT for Hulled.Why are the prices not falling then?Lets looks at some statistics here ( These are my assumptions based on conversations with friends in trade)

According to our estimates there are about 10 Big Hulling factories(Direct Exporters and Manufactures) in India having

a daily capacity of about 30 Mt/Day and an equal number of smaller factories which produce about 20 Mt/Day,these include the Sun Dry manufacturers and small manufactures who get cater to the trading community.Then there are about 15-20 factories which are very small and cater primarily to the domestic demand in India and operate for 3-4 months only ( Oct-Jan).

The new crop started to trickle in around the last week of September.That gives us about 120 days since the factories have started and for farm level arrivals in the local factories. My rough estimate would be that the factories operated for about 90 days in the past 4 months. That gives us the following.

Num of Factories X Daily Production X Working days since 1st Oct(New Crop) = Total Production

10 Factories X 30Mt/Day X 90 Production Days= 27,000 Mt ( 95 % Exported)

10 Factories X 20Mt/Day X 90 Production Days= 18,000 Mt ( 50 % Exported)

20 Factories X 10Mt/Day X 90 Production Days= 18,000 Mt (100 % Domestic)

Total = 63,000 Mt

To make 63,000 Mt the factories would have consumed an average 20% more Natural i.e about 75,000 MT.

On conservative estimates I would like to believe that there has been a trade of about 50,000 Mt of Natural as well including the Korean Tender supply, domestic consumption of the White 99/1 Grade and crushing quality seeds for Oil used in domestic market.

This almost tallies with the farm arrival figures in the domestic markets.

Avg Gujrat arrival about 5,000 Bags/Day

Avg Rajasthan arrival 10,000 Bags/Day

Avg U.P/M.P arrival 5000 Bags/Day

All India average arrival (all states and local markets put together ) = 20,000 Bags/Day

20,000 bags X 80 Kg/bag X 90 Days of arrival / 1000 =145,000 Mt Arrivals from farmers till date.

Based on estimates that the total crop is about 200,000 Mt it means we have about 60,000 Mt at max which has to come out from farmers or farm levels stockiest to work with for the next 7 months.

I'll assume that the summer crop which comes out in April/May in Gujrat will be about 20,000 Mt but their sowing will

depend on how the prices of Sesame seed are viz a viz Cotton and Groundnut.I think with groundnut that is relatively less Export dependent should also factor in the farmers choice of sowing.

Just as it is an open secret now that most Importers have long term open contracts and very rightly so since they assume that the markets will slide further but they will surely need to cover those at some point, however I would also like to believe that the stocking in India was relatively lesser than last year for 3 reasons

a:-) Prices did not fall to a certain level as anticipated which held back the stockiest

b:-) Farmers got in the merchandise in smaller lots

c:-) Financial crunch

To everyone's surprise the prices in Africa started going up at the same time when prices were falling in India.Other smaller origins such as Uganda,Senegal, Burkina Faso , Mali and Pakistan all have normal crops and their farmers like everywhere else feel a little cheated and are not ready to sell their cargo at low prices.As a trading community we all should understand that sesame is a low yield crop which fetches the farmer less than $400/Hectare ( Avg 400 Kg yield) in normal circumstances , this year it seems at no destination the farmers are willing to sell their cargo below the $1000/Mt benchmark levels.For them ofcourse this is still almost half of the levels they saw last year but

still a fair price for a commodity like sesame and that is the reason the farmers are reluctant to sell at anything lower.

In India the balance of trade remains very sensitively placed.I know that in the past the trading community has many times claimed that we might run out of crop at some stage which ofcourse never happened.This year too I doubt a situation like that is likely , not because we have enough but because the demand is down. Last year as well India barely had enough to cover the demand and the carry over stocks were limited and those too were left as the prices and demand fell at the end. We have time and again visited the farmers , traders and stockiest. The stocks are very limited and everyone by the end of Jan will probably get into a hand to mouth scene here as well. Any sudden demand therefore is likely to create pressure in the market , maybe that will not help in shooting the prices up but will surely be helpful in sustaining a specific price levels. The bullrun of USD against all currencies seems to be over and any fall in the USD against the Rupee will only strengthen the prices here in the long run.

Korea is estimated to still buy about 40,000 MT in the next 8 months on conservative consumption estimated.A portion of this is most likely to be supplied by India and even if this quantity goes to Africa it is more likely to support their price levels there and keep International prices within the current bandwidth.I have heard from my friends and colleagues in Africa that the arrival pressure is not picking up in Africa either. Sudan crop is being consumed quick and fast by Egypt and neighboring countries and is almost as expensive as India.Central American crop is not heard of to be any bigger than last year and with very high prices compared to Africa and India their crop is unlikely to create any sort of pressure in the International market this year. Turkey has still not entered the market but are likely to step in sometime soon as their domestic stocks deplete.China should be back in the market after they do the bulk of their consumption during their New Year Holidays.

If only 10% of Chinese population i.e about 130 Million people each buy/consume just one bottle of 400 ml Sesame seed oil ( 1 Kg Sesame gives about 400 ml Oil ) during these 15 days holidays, how much sesame is consumed?You do the math's :-)

Also not to forget the every Chinese family would make or purchase sesame seed balls of "jin dui" during these days because as per tradition their round shape and golden color it denotes "Luck". I read about this at

http://dessertfirst.typepad.com/dessert_first/2007/02/chinese_year_of.html

Once again in no way are we trying to say that the market could sky rocket but our belief is that it may not crash either contrary to some market sentiments.I would still refrain from jumping in the market suddenly as that could spike up the prices to unsustainable levels which may not hold for long , but would advice slow and steady buying and refrain from speculations and open positions.

Sesame Seed Market Report 12th November 2008

First we would like to thank all the esteemed friends and guest whom we had the pleaure of meeting at SIAL , Paris.It was our pleasure and honor to have met you there and a great learning experience for us.

Markets as we expected and mentioned in our previous Market Report started going down after the intital covering pressure eased off and the arrivals picked up after diwali.News of a good African crop is spreading around and this time the Africans have priced themselves very competitively.

The markets in India have falled almost 12% in the past 2 weeks however a portion of this fall was negated by the corresponding fall in the USD against the Indian Rupee which had touched an all time peak of 1 USD = Rs 50.15 in the last week of Oct. The Rupee is currently trading in the range of Rs 48- Rs 48.75 to a USD. Hence a 5-6% of the fall was negated by the Ruppee- USD fluctuation.

In real terms the prices have fallen back to almost the lowest levels they touched this season. The arrivals which picked up after Diwali Holidays have once again dwindled back to same or even lower levels in certain regions. We see some resistance at current levels as the domestic consuption in India picks up pace as the winter starts to set in. With 100% of the crop now harvested ,talking to the farmers and taking into account the average arrivals over the past 30 days from various local markets ,we can assume that the total crop in India should be around 220,000 Mt -240,000 Mt this year.,which falls roughly in the range we assumed last month.Last year the total crop in India was estimated to be about 380,000 Mt.So we are clearly
short by about 150,000 Mt , in addition to the problem of poor quality.

The quality remains a major problem this year, with almost all destinations having major rain damaged seeds.This is creating a big confusion in the market, the price variation between the lowest and the highest quality is almost 12% in the domestic market. The lowest being sold as Hulling ( This is actually the crushing grade, which is rain damaged ) and the highest ofcourse the 99/1 grade.Thea ration of Hulling Grade and 99/1 Grade arrival in the market is 90:10 this
year where it traditionally is about 60:40.The lower grade although looking very attactive in terms of pricing is giving much less yield and more and more sorting rejections which is taking the costs up. In the factory its hard to factor in these cost immediately but we believe sooner or later everyone in the trade will realize this and we should see some benchmark levels being formed. Due to this huge variation in the domestic pricing we see the same for the export
market as well , where our friends and clients have told us that the price band in Hulled Sesamebeing offered from India is almost $100 at the moment.

In a way we did want the prices to come down to sustainable levels to see the demand coming back to India but taking into consideration the current financial crisis we have our doubts that the buying pressure would resume anytime soon, the volumes are certain to drop this year but that could also mean slow but sustained buying all year round this time.Liquidity pressure and global turmoil are bound to affect the sentiments worldwide.

The arrival pressure has fizzed out from India, no doubt that the farmers are stocking marterial anticipating a price hike and usually the farmers dont panic that easy to pump all their cargo in the market if the prices fall. They might hold on to their stocks for good 5-6 months and continue to get limited amount in the market as and when they are in need of some money. African crop is out as well with shipments already taking place from Nigeria.Nigerian quality which traditionally goes to Japan for crushing is being tried by the middle eastern countries for the reason of cheaper pricing. Ethiopia and Sudan are just slightly cheaper than India. With the information we have from Africa , we dont see their prices falling too much as they clearly know that India is not their price competitior anymore
this year.

We now have to wait and see how much more the prices have to fall before the demand resumes and brings stablity to the market. Overall a 5% fall from here would get us below the lowest levels of this new crop and that would mean that technically all the stockists will start to loose money assuming that they all bought at the lowest levels.I am sure there will be some resistance at those levels and keeping aside the few volatile ups and lows that we may have a very "Boring" stable levels all year round. Just as last year the prices could not have just kept going up the same holds true for prices going down too much.Once again its really really difficult to judge the bottom this year and as we always emphasize its exteremly important to have a good average and little but consistant business this year to sustain oneself.India we believe still remains in a strong position as far as Hulled Sesame is concerned and although we have heard about some quantities being served from Africa and Middle east they are of limited quantity and accessible to a limited few.

We fear that a lot of companies might close their Sesame operations this year , we already have news about a few companies trying to finish their existing orders and stocks and step away from the market.Actually its not the sesame that is selling this season, "Only relations are selling". Friends and clients are back to the most trusted suppliers , and with slow down in demand they see no reason to go fishing around and risking huge amount of their money on someone unknow. I think that will and should be the trend this season as business will be done mostly on back to back or hand to mouth basis.

It has been a year or uncertainity , we started the year 2008 with extreme bullishness and by the end of it everyone seems to be bearish. Sometimes I get the feeling that in India the sesame prices are somehow magically linked to the stock markets.

Sesame Seed Market Report 14th October 2008

As most of you must have been already updated by your respective suppliers about the Trade meeting that was held on 11th and 12th Oct in India.

Most of the eminent trade related people attended the conference which included the Exporters, Brokers and Local Suppliers . Everyone put forward their views about the crop size and quality. Our trade association also sent out survey teams to all Sesame producing states to give us all a first hand idea about the situation there.

As per our previous market report we estimated the crop size as follows

Origin Estimates Aug (Mts) Estimates in Sept (Mts)
U.P/MP 110,000 100,000
Rajasthan 110,000 100,000
Gujrat 70,000 70,000
Others 10,000 10,000
300,000 280,000

However at the trade the survey teams findings were as follows

Origin Estimates (Mts)

U.P/MP 85,000
Rajasthan 110,000

Gujrat 60,000
Others 10,000

265,000 Mt

However the traders and brokers from Rajasthan put forward their view that due to some late rains in Rajasthan at the time of harvesting there have been some damages and they estimate the quantity to be around 80,000 MT.Even the estimates in U.P and M.P were argued to be lower but not very significantly.

This gives us a range from 235,00 Mt to 265,000 Mt for the Indian crop.Everyone agrees that China has a better crop than last year and may not necessarily buy from India , unless the prices fall significantly here and even the African Crop looks very promising up and is estimated to be up by about 10% from last year.

All the crop is however delayed by 2-3 weeks in India due to the heavy rains at the time of harvesting and that means the arrival pressure is not building up at any destination.We also believe that although not many people have sold big quantities forward this year as buyers were reluctant to cover as well so early on , we have to take into prospective the collective sale that has happened over the last few weeks in anticipation of price fall by the Indian Exporters.The untimely Korean Tender's , last 2 of which combine to be a quantity of about 10,000 Mt is mostly open contracted and is yet to be covered along with numerous smaller contracts that our export fraternity has also sold without covering.

The arrivals that picked up in Gujarat and Rajasthan have been broadly stagnant and since in India we have Diwali holidays from 22nd Oct to 29th Oct there is a big rush to cover at all levels by exporters who need to fulfill their Oct-Early November shipments. The situation has been worsened by the rain damaged seeds which are estimated to be around 20-25% of the total crop this year.This quantity is totally unsuitable for exports and will get absorbed in the domestic oil crushing market in India.

Everyone at the meet also agreed that the demand will go down significantly this year due to the high prices and global financial turmoil which we believe is true as well.However with Indian export's touching 320,000 Mt figures last year even a drop 30% of global demand (Including Chinese demand which was about 60,000 Mt ) last year we still need to have about 200,000 Mt to export which is again the back to back situation we faced last year.

This should keep the prices firm atleast till African harvest starts in Nov End/December.The prices impact in the last few days may have surprised the buyers as the domestic prices have not really appreciates by that much as the FOB and CNF prices that the buyers may see reflecting on their respective current offers now as compared to 1-2 weeks ago. The problem here is that most sellers were offering prices in anticipation that the prices will fall , many not necessarily speculating but taking a calculated risk by estimating that prices may soften by 2-3 % as the arrivals pick up , however with that scenario gone now they now have to factor in not just the 2-3 % calculated risk but also the 4-5% price rise in the domestic market and the 2-3% fall in the USD. So suddenly the prices are 9-10% expensive although the price rise in Domestic market in India is only 4-5%.

As we assumed in our previous reports the fluctuation again this year should be in quantum's depending more on the USD and the market sentiments rather than actual prices as and when they are at a particular point of time. Also if by any "Bad Luck" the domestic demand of sesame seed in India which is traditionally very strong during the months of Nov end till Mid Jan remains strong as previous years we can easily see a consumption of about 50,000 Mt in the India which can further put pressure in the market.

Despite all the above we do not expect or want the prices to go up , we would rather see prices of sesame at a sustainable level with good volumes rather than very high prices and a major slow down in demand for the coming season as that can hurt any trade in the long term.Other destinations can easily substitute the Indian suppliers as far as Natural sesame is concerned but we still believe that India is still in a very strong position as far as Hulled Sesame seed is concerned. Last year we saw emergence of certain new destination for Hulled but those were mostly because of the crazy price escalation which gave them a window to match or even sell at lower prices than India at certain point of time as they managed to cover the raw material early on low prices.However that may not be the case this year as prices have started on a high and strengthened from those levels without touching the bottom.

This sudden price rise has caught most of the exporters and importers by surprise as everyone expected the prices to fall atleast for a short period which did not happen, everyone hopes here that once the covering buying is over for the Korean tender and short covering we may see prices slide again after Diwali i.e End Oct/Early Nov which should them open a window to cover again.We see another opening around End Jan after the African Crop and slowdown in Indian domestic demand.

Once again we emphasize that it would be very difficult to judge the bottom this year and most trade will have to be done based on a better average.