Market Report 12th April 2010

Hello Everyone,

Its been a long time since I updated the market reports but as we all know there was very little action in the market to write anyways.

Last few weeks ofcourse has seen some serious action and now everyone is back on their toes trying to study the market and predicting the direction. Lets first look into the scenario that unfolded in the past 6 months i.e after the new crop.

1:- As everyone predicted and expected the crop was fairly good although not as big as the last crop but definitely a good sized one which could have sustained and fed the export demand well.

2:- We started on a low key and the crop was a little late but on anticipation of a good crop the exporters offered low levels which were fair priced enough for the buyers and they took in a good quantity.

3:- Then the usual Indian market mischief happened and prices shot up by 15-20% in 2 weeks time and everyone who was short was caught off guard.The stockist thought it was a repeat of the year before and speculated that the prices will go even higher thus hoarded the crop in a big way. Result was that the demand suddenly shifted towards Africa and prices started to come down slowly, however the stockist continued to buy trying to make an average.Even the farmers held back the crop and brought in less every time prices tried to go down.

4:- The Korean Tenders came and went, India got a substantial quantity but with even bigger stocks its failed to create any ripples.In fact prices move up in anticipation every time the Tender is announced and fail to continue the upward move even after the tender is declared as the bidders are mostly covered or prefer to wait a while before covering themselves rather than rushing into buying as they normally did in the past.

5:- Then came the big bang , Chinese demand was supposed to return after their new year break but all the waiting and expectations were dashed after they came ...they saw ...but they didn't buy.

6:- Stockists still held their nerves , in fact even as i speak they are still optimistic. The reason being that in line previous years where stocks were being held largely but corporate giants and exporters this year the stocking happened at very low levels Farmers , middleman , village level suppliers , yard based stockist etc with factories and exporters keeping very little in hand.

7:- Now when everyone See's that the demand is fairly low and the new Gujarat Summer crop ( Last yr is was about 60-70,000 Mt , this year should be 40-50,000 MT as well , I presume lower crop due to very very dry climate and lower sentiments in farmers due to prices) there is a bit of a panic and a lot of suppliers want to finish off their stocks so its kind of a fire sale going on right now.

8:- The USD has fallen to the levels of 44.30 , levels last seen about 2 yrs ago and with the improvement in economic conditions in India we don't see that it will be able to climb up any higher. The $ affect is bound to
keep the export prices in a certain bandwidth for some time now.

All this said and done we still believe there is another twist left in the tale :) Prices have bottomed out to some extent and the most stockists have already booked the losses and moved out.

I dont know how many people actually keep a watch over the world weather but the news in drought in China is quite alarming. http://www.ipsnews.net/news.asp?idnews=50996
Although its still early for the new sesame crop sowing in china , my doubt remains weather the Chinese Govt would try to promote sesame sowing or rice/pulses/grain sowing this year as their food basket seems to behalf full at this stage and with food inflation still very high the decisions could be drastic.

In India as well the last 5 months have been very very dry and summers seems to be here early with Temp already touching 40 degree in some areas.If the summer crop is good and price do fall more from current levels it could mean that in terms of farmer the price that they get per Hectare would fall to almost half levels of what they saw a couple of years back and their might again be a crop shift as pulses are still very high priced.

The stocks in India and Africa are still presumed to be quite large and should be enough to last us till the new crop however its the prices of the old stock that can drastically affect the direction in which the new crop could move.A lot of exporters faced problems with default from Buyer's this year and the trade is getting a little cautious now sadly the new babies in the trade do get sucked in by greed and mis-information and the cycle continues.

However one thing is sure that in future we will see a lot more defaults from both sellers and buyers as the trade got dirty over the past few years with the sellers defaulting on low prices earlier and the some buyer's creating problems with high prices later on , now its almost common to hear such stories.

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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.

ANUGA

WE CORDIALLY INVITE YOU TO VISIT US AT ANUGA,COLOGNE.
OCT 10th-14th , HALL 1.1 BOOTH F 039a. INDIA PAVILION.

MARKET REPORT SESAME SEED SEPT 9TH , 2009

I am sure everyone is awaiting the new crop arrival of Sesame Seed in India. The crop as we all know by now is a little delayed.Usually we see the 60 Days crop of Gujrat coming out by Early September and the normal crop by Mid of September after which U.P/M.P/Rajasthan crop follow around end October and early October.

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.

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

--------------------------------------------------------------------------------
Gujrat ---------------------- 60,000 MT---------- 60,000 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

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.