Sesame Seed Market Report July 30th 2013

Hello Everyone,

Time again for the sowing season in India and for bulls/bears to come out with their own adventurous stories.

Sesame Market has been lackluster over the past few months with limited demand and slow international movement. The Ramadan demand did not create any ripples in the market as expected and the very strong $ has kept the prices low in international terms despite stable and high prices in local indian currency.

As we all know India imported huge quantities of sesame seed from Africa this year at the start of the season and that helped sustain the demand of factories here for the full season. The domestic crop  is more or less exhausted and with good 2-3 months to go before the real new crop actually arrives in the market I believe we will most likely finish everything even if things move at snail's pace.

1:- Why are the prices falling :-
      Everyone keeps asking the same question now, why are the prices falling when stocks are low ?

The first reason ofcourse if the USD which has fallen over 10% over the past few months , in commodity terms thats like a discount of USD 200-250 /PMT despite prices being same in domestic terms in India.

The second reason is slow buying from customers , I think with high levels very few take risk and have decided to go back to back on their purchase. Like i said before some people indicate that the consumption has dropped , again I never agreed with that fact. It's probably that people have low inventory rather than anything else . The overall numbers however tell a different story.

Export of Sesame Seed from India

                                    April 2012/March 2013                 April2011/March2012
       
Total (Qty/Mt)            299,517.50                                      389,153.50                      Less 89,636

Major Deviation country wise :-

Taiwan                         14970.00                                        24467.00                   (- 9497 )
China                             2807.00                                        11389.00                    (- 8582 )
Egypt                             8298.00                                        20402.00                     (-12104)
Turkey                         12610.00                                       16223.00                     (-3613)
UAE                              3730.00                                         6391.00                      (-2661)
Vietnam                       45664.00                                        89088.00                     (-43424)

Total                                                                                                                        Less 79,881

So the numbers actually say that 90% of the shortfall is due to 6 countries alone, barring UAE all the other 5 countries mostly buy Natrual so I am assuming their demand shifted to Africa because prices were low there. So i don't really see a pattern of consumption fall , its merely a shift to the cheapest source of supply which is a normal reaction in today's global scenario.

The third factor is ofcourse profit booking. Since the demand was slow and most exporters unwilling to take undue risk there was profit booking at every stage which kept the prices down. Everytime there was a jump there was someone in the market willing to sell at below market price based on his stock value rather than the prevailing prices which continues to confuse and pull the prices down.

Usually in a bear market i would be worried if its a supply based fall...however when the fall is demand based it usually means there are pockets of opportunity for both seller and buyers and the trends are very hard to predict.

Back to the Present :-

So what is actually happening with the new crop now. The views ofcourse differ from person to person. The monsoon has been early this year , but it has also been very strong. The sowing usually starts after we have the first few rain showers and the soil is well irrigated .

Talking to the local's the sowing has started in area's where they got a chance and is good in terms of size so far , some area's ofcourse are still waiting for the rains to stop. I am usually not flattered by the sowing number's because atleast for sesame seed they are irrelevant unless we have the perfect climate during harvest. A few days of rains during harvest can change the number game drastically as we have seen in the past.

Pls find below the rainfall chart for June-July and you will notice that the rains have been far far excess in all major sesame growing area's except for Rajasthan. However its still too early to say if that's good or bad. My gut feeling however say's that since sesame is so sensitive to water and with a good monsoon now confirmed the farmer's would be taking a lot of risk placing their bet's on sesame.

Ofcourse the traditional sesame farmer would continue to do it , but for new acreage to be added its a risk you have to keep in mind.

US$ will continue to remain volatile it seems and its movement can decide what levels we will see in the coming future. Overall I believe with low global stocks another failure or bumper crop in the coming season in India , China or Africa and turn the tide's either ways.

Sesame Seed Markets After Korean Tender April 29th 2013

Hello Everyone,

It's been a quite 2 months in sesame seed markets , with prices staying mostly stable.
Korean tender was announced on the 26thApril and India got 4800MT while Africa took 1200MT. Interesting to note that for the Machine clean Premium Quality the whole quantity went to India.

 The question on everyone's mind now is that despite the Korean Tender going India's way why are the prices not rising , Infact they are falling a bit. I wouldn't say dropping because 4-5% change in prices on a week to week basis is very normal movement in commodities now.

My own observation in the recent times has been that just before the Korean Tender prices stay firm or rise in anticipation of something big but after the Tender is announced they tend to slip a bit. In some cases if India does not get the desired quantities its pretty obvious that prices will drop , however in cases where we do get a big chunk , like this time, prices still don't shoot up ,WHY?

Well I think its mostly because the shipper's get busy preparing the cargo for exports and stop or delay fresh buying unless they were short , which in this tender was not the case. Everyone had stocks and were clearing their cargo rather than speculating. However once you get everything packed , checked and cleared its pretty normal and obvious that they will come back for some more shopping.

With almost 5000 MT of Inventory cleared up from the market I would assume these players would surely come back to cover atleast 50% of this next month when the gujrat summer crop starts.

NUMBER GAME :- 

In my March report we had estimated Gujrat Summer crop to be around 30-40,000 Mt , but fresh estimates and reports put this number between 15-20,000 MT.

The stocks in india have gone down drastically. In case of Hulling industry I think only a few have raw material in excess of 300-400 Mt or just about a months Raw material. However there are still some stocks in Gujrat of the Imported cargo which is on offer to the highest bidders anytime. New Imports have practically stopped due to high prices in Africa.

As expected Africa would continue to wait till the Ramadan demand in June-July before any panic selling starts there and by that time it would have been too late for India to import anything owing to the
long transit times ( 45 days to 2 months)  and previous issues with quality and delivery from Africa.

Im my opinion we should almost exhaust all stocks and raw material by end of Aug-September even if the demand remains really slow and exports fall dramatically.

WHAT CAN HAPPEN :- 

Just as we mentioned in our last report , there have been jumps and then correction's thereafter in the past few month. All this of course have been because of profit bookings by almost every exporter.

I think this trend will continue in the months to follow till next new crop in September-October however what can change is that most of the people will exhaust their stocks pretty soon and close down. At this moment as well i assume almost 50% of the hulling factories have already taken a shut down and more will follow suit if the situation continues.

If the prices continue to remain high till season end and the next new crop is delayed or is bad we expect prices to stay firm for the next season as well. With complicated import rules and with a lot of financing involved the Import of Sesame seed is only limited to a few people in India and is not lucrative until unless the price gap is big enough. Importing for re-export also means a lot of speculation in terms of Quality , Delivery period and Price fluctuation which is never the basis of a good business model.

CONCLUSION :-

Overall i believe that there are some good bargains in the market available at the moment for people who wish to empty their stocks and move out however looking at the long terms picture from May till September period I do not see any big fall or corrections in the prices at the moment unless of course Africa comes out aggressively and drops its prices and some hidden stocks suddenly appear in the Indian market.

For Hulled and Sortex Clean Natural India still remains the preferential and logical destination and Africa will still have to work hard to catch with the Infrastructure and Technology available here.

Unlike in 2007 or like in other commodities prices of Sesame have remained Range bound over the past few months which is a good thing as the importers and their customers now have gotten used to the current price levels. For Hulled sesame the price of $2700 does not look unrealistic anymore and if the prices are corrected by a  few hundred $'s for a short time it would seems attractive enough for a lot of customers to cover their needs.

I would have been worried if the prices had shot up above the $3000 levels , where the pull back would have been very sharp and chances of loosing a lot of money were high. Overall I think its important to keep a watch on the markets for May-June period and cash in on any bargains for short term and it would be important for the importers to plan their demand-supply till End October because I doubt the new crop will be available in their warehouse anytime before that.

I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market all stocks go down and in a bull market they go up.


Happy Summers Everyone :)

Gujrat Summer Crop

The latest rumors in the market about Summer crop are all varied. With estimates as low as 10,000 to optimistic levels of 20-25,000 MT.

However looking at the water/rainfall situation it looks that in most certainty it will be a very bad crop and with stocks in India at all time low and with no chance of big shopping from Africa anymore i wonder how India will continue its supply for the next 5 months before the next new crop in Sept-October.

Attached a Rainfall data for Gujrat for the last 1 Month. As you will see there is absolutely zero rainfall in all the districts and I wonder how farmers will make the sowing in such dry weather with irrigation facilities also failing.

Market Report 12th March 2013

Hello Everyone. 

I hope everyone enjoyed the roller coaster ride on the Sesame Street in the past 6 months. Happy to see that most of the predictions in my last report of October have turned out true.

CROP SIZE :-

1:- Everyone expected the number's of 270,000 -280,000 MT to hold true but i think its pretty much   clear that India by no means had more than 220,000-230,000 MT at most. 

Everyone waited for the Diwali Holidays ( In my last report I did mention that things could change dramatically after Diwali ) to get over and the supply to pick up but in reality it never did and everyone was caught on the wrong foot , including a lot of Indian Exporters. The supply in the markets is still not picking up despite record high prices in Indian rupee terms which can safely be interpreted as " India had a bad crop ".

2:- Globally , It is no secret that china had a small crop as well. Africa was billed to be the saviour for everyone but it turns out they too played the bluff game like India in the past :) The crops in all African origins were just about the same as pervious years and in some areas even lesser so that means the global shortfall created by Indian and Chinese bad crops cannot be fulfilled this year.


NUMBER GAME :-

With such a dynamic broker force in place India has that edge over any other country in getting the latest report just in time before everyone else does. After people realized that India crop was not going to be enough they turned their attention to Africa. India's bought left, right and centre from all African Origins i.e Sudan , Ethiopia , Nigeria , Burkina etc and covered all their open positions. With a substantial price advantage this year a record Import of Sesame Seed happened. If the markets are to be believed India imported about 40,000-50,000 Mt , I would put the number at a 25,000-30,000 Mt mainly because their was a substantial default from African suppliers when the prices suddenly shot up and secondly because yes , Indian's did buy a lot in Africa but not all headed to India, a good chunk was exported as 3rd country trade to China, Vietnam,  Turkey etc.

This 25-30,000 MT gave India some breathing space as it covered almost 2 months demand of the hulling factories but since Imported cargo doesn't come with a credit line the money supply slowly but surely dried up. With long transit times ranging from a month to 2 months the everyday local buying slowed down considerably.

African markets slowly caught up with Indian levels, I mean how can you expect them to keep selling cheap , it had to happen sooner or later. The Indian's stopped buying , Chinese went on their new year leave , Turkey was not very active either but still the prices in Africa remained firm and everyone wondered why. I think the obvious answer would be they got carried away and sold too much too quickly and now they dont have a lot of stocks to sell either. We should not forget their next crop comes out in Nov-Dec so thats a good 8 months away.

Ofcourse the big players in Africa have some stocks or atleast they know who has it but i doubt they will panic to sell out anytime soon enough , not until they see the Ramadan demand first which BTW falls early in August this year so the peak demand will be in June/July.

Just for the Numbers official figures as follow
 Indian Exports for April to September

                                       2010-11              2011-12            2012-13

April-Sept Export            207,854               180,485                 ---

Assuming the Indian Exports would fall by say 30-40% because a lot of clients tell me , ahhh demand is slow , people not using sesame anymore , high prices means low demand etc etc , we would still need about 110-120,000 MT. 
Oct-March numbers , for 6 months taking average monthly export to just 25,000 Mt/month , we have already exported , produced and sold about 150,000 MT . Domestically India must have consumed about 15-20,000 MT in the winter months. That is about 170,000 MT .

 We started the season with 
1:- Carry over stocks of not more than 10,000 Mt 
2:- A crop of about 220,000 Mt
3:- Imports of about 30,000 Mt
In Total About 260,000 Mt with an error margin of not more than 10% either side.

That leaves us all with about 90,000-100,000 MT plus the Gujrat Summer crop which is estimated at about 30,000-40,000 Mt , just enough to get through the April-Sept season. 


WHAT CAN HAPPEN :-

In the past few months we have noticed that the markets in India have been range bound. Their have been a few big jumps but their was a correction soon after. The main reason i believe for this is the profit booking that happened at every high level. The Import cargo have been coming in slowly and in Dec some people booked orders based on their imported cargo prices and not the levels at which Indian markets were trading. 

Then their was the first korean Tender of the season in October , as expected India got all and everyone was bullish. The 2nd Tender came and like i mentioned in my last reports the Africans came out aggressively and Bid a huge share , that suddenly stopped the markets and it has been hovering in the 100-200$ up-down range since then, till the 3rd Tender was announced recently. India got 4200 Mt and Africa 1800 MT . However the 1800 Mt will also be shipped from India so technically all 6000 Mt will move out of India. This however was a profit booking tender as 31st March is Financial Year Ending in India and everyone would love to have good numbers in the balance sheet. The money is clearly short at the moment due to March Year closing but the 6000 Mt export should bring in some liquidity.

In my opinion most of the Imports into India will finish this month so profit booking is almost over. Prices in Africa remain at par with India, new imports will be almost negligible. A lot of profit booking has already been done by the stockiest and i doubt they are afraid anymore of a price fall. With money shortage the stock sizes have reduced drastically which means the cargo is now spread into 100's of small farmers, traders etc making it that much more difficult to bargain.

My opinion is that if the buyer's are still short which I think they are , and if the demand remains slow and steady their is little reason for the markets to fall. Ofcourse the reasons for price rise look more promising as Ramadan demand is totally open , China is still not fully covered , Japan I am sure is the same .Korea will continue its buying irrespective of the price levels and if the Summer crop fails I cant even imagine what will happen.

CONCLUSION :-

I am still bullish.  The prices have increased by about 25-30% from the season's low  in October which is nothing really that dramatic looking at the global situation. A lot of people tell me demand will shrink , somehow I never believed that demand shrinks , it just moves from one place/person to another. Its unbelievable the growth story in Middle east , just like in china the sesame oil demand suddenly picked up I am sure the same will happen with the middle east in terms of Tahina/Halva/Hummus/Bakery consumption and demand in years to come. 

If the demand/consumption does really shrink , I am sure the supply will not increase either , so  sesame business should get more & more concentrated in the coming years with lots and lots of money involved and added risk of volatility. 

When someone says sesame is not attractive to them anymore please don't forget that their is always someone ready to take your place , The only way to win is by staying in the game , it will be a tough game ahead but as they say " No Pain , No Gain" .

Market Report October 17th 2012

I am sure last few days have been busy for everyone. Everyone was waiting to get some numbers on the new season and last week our association IOPEPC finally came out with some.

It was great to know that the market report was being circulated in real time by some of our friends. I actually got an SMS IN the conference hall with the same crop numbers on the screen even before the presentation was over , it was hilarious :) but that's India for everyone.

Now to some interesting facts and numbers , which most of you probably are already familiar with.

NEW CROP SCENARIO :-

1:- Total Crop Predicted in the range of  270,000 MT -280,000 MT. Since this year the crop survey was done by an outside agency and not by the people of the trade i would take this number to be more or less accurate with 10% margin on either side.

I really hope the error is on the higher side because a crop less than 250,000 would be a real bad situation for the trade.

2:- UP/MP is about 150,000 MT put in total so thats where most of the cargo will come from as always. Rajasthan about 80,000 Mt and Gujarat about 25-30,000 Mt at Max . Since most of the Rajasthan/Gujarat crop will anyways go for Natural 99/1,98/2 grade , everyone can safely save on the "Gujarat Origin Hulled" premium till summer crop next year , because I don't think after taking out the natural grades and stockist share there is much available for hulling.

3:- Globally , China is short and thats a confirmation as well , though various trade organization and sources. The shortfall compared to last year is about 100,000 Mt , which is just about the same as India.
So overall the world shortage about 200,000MT which need to be filled, from where and hows lets see.

3:- African all origins are doing well this year. All the crops that have come out till now have been good and almost same as their previous years.However the 2 biggest crops from Africa i.e Ethiopia and Sudan are yet to be harvested and if reports are to be believed the sowing and weather have all been good. If anyone can fill the 200,000 Mt global gap its these 2 countries.

4:- The carry over stocks worldwide in all producing and consuming countries have been less than previous years as well , that again is a confirmation and no rumor or else we would not be in a situation as we are today.

NUMBER GAME  :-

India crop as I reported in my last report is late . Almost all the reasons we predicted were indeed spot on for the small crop this year round.

I know some would say last year as well we had predicted a small crop ( SEPT 15th 2011) report and stated bullishness and were wrong. I agree. We did go wrong on the preditions but like i always say , I just compile what i hear from sources and yes we were wrong on the Number but not on the bullishness factor. Markets did remain bullish all throughout , its just that the customers did not feel the pinch because the USD from Rs.44 in Aug 11 moved to Rs. 57 in Aug 2012. This year however i think chances of a reversal are more than further weakness. Its already down to Rs 53 from Rs 57 highs.

Looking at some numbers :-

	2010	2011	2012
Gujarat	50	40	20
Rajastan	130	110	80
MP	70	50	70
UP	80	100	80
Maharastra	10	10	10
'000 MT	340	310	260

In the past 2 years the India exports have been

                                  2010-11              2011-12            2012-13

Sesame Export         398,000            399,000                   ---

Ofcourse the Export numbers include the Brown and Crushing grade Sesame as well which comes from other states than the above mentioned 5 and the summer crop production , but this also includes the Hulled Sesame and Cleaned Sesame Numbers which means a lot more quantity in terms of farm level. Not to forget the Domestic demand also came out from these production numbers .

So what does these numbers suggest? I would say 2 things

a:- If the global demand remains the same , India is short on supply this year for sure.

b:- Carry over stocks have mostly been consumed over the past few years due to mismatch production and Export numbers.

WHAT CAN ALSO HAPPEN :-

There have been some news of late sowing in the market. The current trend is to underplay that news because no one wants to be out of the pack trying to justify that there could be a bearish factor as well in the near future. I am not sure how big or small that late sowing crop could be but if a significant number comes out in late november it could stall if not derail the bullish trend for a while.

Africa comes out in December and that can be a game changer. With the excess stocks they have in hand they can really go full throttle on the sales and come out with aggressive prices and take away the advantage from India. It could lead to be a cat and mouse game after that. India will drop its prices to recapture the market, Africa with its bumper crop will drop further and we see a crash as we have seen many a times in India. But there is a big IF in this situation , IF africa comes out with the numbers projected so far because the carryover in Africa are not significant either so this game cannot be played with cards in hand , it will all depend on the cards that are dealt to us in December.

The demand can and probably will shrink a bit as well as we have seen in the past with higher levels. At high levels the risk capacity reduces significantly and people tend to start focussing on other money making avenues to cut their risk. The consumption slows down and people tend to stock very little or prefer back to back trade which in turn makes the market nervous and keep the price movements limited.

Koreans have been a significant market movers in the past few years and any infiltration on this front by african players can set the cat amongst the pigeon and pull down the market, India will have to be competitive enough to grab the korean market share again. We shall know that in a few days time as a 6000 MT Korean is scheduled for 24th October. Maybe the africans will not be aggressive in this one but the price acceptance should prepare the african contingent for the next battle.

WHAT HAS CHANGED :-

A lot of people when talking of sesame this year start the comparison with the 2007-2008 yr where the markets went crazy and beyond anyone's wild imagination.  There are also comparisons with what happened in GUAR GUM with their unbelievable growth in the past few years.

However there are a few changes i believe since then that we should keep in mind

1:- In 2007 , China was short and Africa was short . India was the only supplier so technically what happened in India that year should happen in Africa this year. With no cargo or with most swept and locked warehouse what are you left with to sell. When we dont have anything to sell the price could be anything but you are not making money , right.

2:- In 2007 China had recently become a next importer , till 2001-2 it was also an exporter with a huge crop. Their crop was going down slowly , their domestic demand was picking up and they started cutting down on export when 2007 happened and suddenly they had a very short crop and they were caught offguard. At that point they primarily preferred india to cater to their imports and that led to a very bullish buying from India.

Now ofcourse the situation is entirely different , they import most of their requirements from Africa and will look first towards Africa to fill in their crop deficit. The Border trade with India should continue as well. This time their import numbers suggest that they were well prepared for a short crop and hence started to clean up the African stocks much in advance. However their stocks are still at lower levels and they will have to buy soon.

3:- The $ was not as much volatile back then at is now , with 1% +/- movements on a daily basis and 10% or more movement over a full year horizon.

4:- The demand has certainly grown as well in the past 5 years where as the crops have not grown in tandem.

CONCLUSION :-

We are BULLISH. No doubt about that. I think if someone manages to catch the bottom levels there are good chances they will make money on a long term basis this year. YES , there will be up's and down's. There will be times of low demand , there will be times of global competitiveness but on a long terms basis , on a 12 month scenario till next crop we are definitely bullish.

The new crop as predicted is late and not even fully out in the market but we saw some upwards movement already. I think it was more of a panic situation after hearing the numbers. I do expect some corrections in the coming weeks as farmers/stockist will first test the waters by letting out the first arrivals before holding back and that is when the game really starts. However mistakes and misses are most likely to happen in the falling market so everyone really needs to be on their toes for the next few weeks. Things could change drastically after Diwali.

That said , If things turn out to be the way they are expected , my previous JULY 19th report about benchmark reset should stand correct and Sesame for the near future will not be a sub 2000$(Hulled) commodity anymore.

People have been talking about 100-150% growth in price , I once again wish i knew the limits but in a bullish year and the current volatile global market situation it should not be wrong to wish for atleast 50% price growth. Im sure everyone can do the maths on this.

Once again our suggestion would be to be in the market all the time rather than waiting for the bottom levels. A good average  is more likely to ease off the pressure than having sleepless nights to catch the bottom the next morning.

Like always would be nice to have your suggestions and comments. We can connect on Skype :- mukulgupta78 or you can mail me anytime on mukul@shakumbhri.org.

Sesame Seed Market Report July 19th , 2012

Hello Everyone,

"All said and done , the market is hanging on its edge I believe" . If you read my last report you would remember these words :)


What an amazing turnaround it has been for sesame seed in the past few weeks. The sellers were literally on their knees begging the customers to buy something and no one was stepping in. The 5% duty rebate was taken away and the markets still did not push forward and that I think was very surprising indeed.


So the question now is WHY and HOW and more importantly WHAT NOW. Once again i wish i knew. But lets work on some points to understand the WHY first.


WHY and HOW


1:- The bullish feeling as we all know started at the start of the season. Stocks were low but so was the demand.
The demand came slow and steady and that helped keep the market range bound for most part of the season. The carry forward stocks were good too and stockiest gave up on the market and diluted their excess stocks , barring some rigid and financially strong players. By the time we finished the Oct crop , the Summer crop stepped in and eased the pressure that had just started to build up. However with 2 big back to back Korean Tenders ( Almost 24,000 MT ) that's like half the summer crop sold the pressure lid was off. 


2:- After April everyone was going slow in the market. The buyers were going hand to mouth and so were the sellers , it was the logical thing to do looking at the global demand situation but how wrong were we all. 


3:- With Mr Dollar acting strong no one realized that even though the prices in USD terms looked stable and range bound they were actully heating up in Rupee terms from the farmer and stockiest point of view. Everyone failed to judge the undercurrent that was starting to build up.


4:- Delayed and irritate monsoon. Its the same story every year and sometimes we are right sometimes wrong but it does have a very important  market impact.Its crazy to judge the volume and size of the crop right now but the fact remains that with late rains the sowing is late and that means the crop will be delayed. Even if we assume all sowing finished by July 15th , 90 days crop means crop will not be harvested before Mid Oct and available to exporters and factory by end of Oct for shipments. That means the first new crop containers will not reach the destinations before End November.


5:- Commodity bullishness in other commodities. Since most of you deal in multiple commodities you would know nothing is cheap at the moment so what should sesame remain at the bottom of the chart. Rumours of crop shifting by farmers may or may not be true but if you were a farmer and you had the option to grow anything out of Guar( All time high prices and still strong demand) , Groundnut , Cotton , Soya and Lentils what would you choose .Im sure some if not many will change their loyalties to sesame seed.


Now that we've see a few Why's and How's , lets change to 


WHAT NOW


1:- Indian's as most would say have played the Bluff card time and again in the past , maybe this is just another one. Maybe you're right , but what if you are wrong. We've all seen what happened in the past and there is no reason why it cannot happen again.


2:- Stocks are definitely low , no doubt about that and this I'm not stating from a general prospective but hard facts being in the middle of the action. Part of the reason could be that stockiest and sellers are getting greedy and do not want to sell in anticipation of higher margins but also because they have very little in hand to sell. 
Who doesn't like profits, if you have 10 apple  in hand you sell 2-3 at a certain price and make profit and then wait for the next rally , then you repeat the process right ,basic rule of Business. But what if you only have 2-3 in hand , you wait and wait to get as close to the peak as you can. Thats exactly whats happening in India right now.


3:- Best case scenario  : Demand stops , market stabilizes , new crop is good , prices are revised 10-15% as they always do and the next season prices remain rangebound.
    Worst case scenario : Panic demand comes in , Stockist hold back creating artificial shortage , Prices rally to staggering highs , New crop is bad , everyone rush in to cover the first seed available and the vicious cycle continues for the rest of the season.


Ofcourse the best and worst care scenario would depend which side of the fence are you on.


Another interesting observation, Every commodity as we know moves in cycles , its a proven fact and remains valid for everything from gold, silver , oil , food everything. Sesame seed if you all remember had a benchmark price of about $500-$600 way back in 2001-2002 . Then some factors pushed it up to about $1100-1200 and finally the benchmark for the next few yr 2005-2006 was set to around $1000-$1100 range. The cycle repeated itself and prices rushed unto staggering highs and after correction the benchmark for the past few yrs was set at around $1500-$1600 range.


My assumption is that its time for another benchmark correction jump. I don't know what high's the prices can reach in months to come but i do know that in the coming years the bench mark will be revised to around $2000-$2100 range. Its a necessary evil and over a period of time we all learn to live with it , if these benchmark prices were not revised periodically the commodity would lag behind and die slowly as the farmers would fall behind in the inflationary numbers. 


Another thing is the growing consumption , I personally feel that consumption world wide is growing slowly for everything and that includes sesame seed (oil form mostly i think) , although the growth of 3-4% annually may not suddenly reflect in the prices each year these growth  numbers do add up over a period of time and make the reset benchmark prices even more logical.


Like I said a few year back , this year its time to renew old bonds and search out your trusted suppliers , it could be a rough ride ahead. My father always tells me " If you don't have a good supplier , no matter how good a salesman you are you will never make money"


Once again it would be nice to have your comment and suggestions.  

Attahed is the Rainfall data unto last week from govt sources, you can see most sesame sowing areas are way too dry for full fledge sowing. 

sesame seed April 2012

Hello Everyone,

Finally some movement in the sesame markets. Last six months as we all know were quite boring with the prices moving sideways or downwards most of the time.

When I look at the export numbers ,the demand has not really gone down , the quantities remain the same with slight fluctuations over the past 3-4 yrs average but still the feeling was opposite.It seemed that the buyers were purchasing less , people were eating or using lesser sesame but the numbers really say that was not the case.

What i really think is that the market dynamics have changed quite a bit over the past few yrs , traditionally Oct-March were peak buying seasons and most buyers covered enough in these months to sustain their sales till May-June, then in June-July-Aug we saw slow demand and then buyer's would wait a month and rush for the new crop in October again , this was the trend in past. What I think has happened now that with so much volatility in the market the buyers are buying more back to back hence the demand-consumption in the months of Oct-Mar is slow and stable.

However that also means that the buying will continue all year round now and that we do not see the so called " off season " anymore. From the average that we have the monthly demand still stands at about 22-25,000 MT per month or about 260-300,000 MT per year. The demand pattern are more of less same every month, with slight variations when the Korean Tender exports are made which are usually 4-5 times per yr.

Now getting back to the Current situation.

What happened ,why the sudden rise? A question that everyone has on their minds at the moment.Well there are a few points which collectively are responsible i think , lets look at them point by point

1:-
Start of the season everyone said the crop was lesser than previous years , True. Everyone was Bullish , True .
A lot less long term business was done , True.
Everyone is India had excess stocks , True.

Then the demand factor stepped in,demand was slow for reasons discussed above and everyone was caught off guard. The strong USD played its part and prices looked low in terms on $ but in reality they were still strong in Rupee terms. Soon the Hulling factories had no option but to keep selling at discounted prices to keep the machines running although the raw material prices kept stable in Rupee terms.

2:- Everyone kept ignoring the facts and got rid of their excess stocks by Mid March and never covered again thinking why stock when the market is not moving anyways.
This goes both for suppliers as well as buyers.

3:- India has a total of about 800,000 MT of sesame , White, Brown , Black , Red( Double Skin for Oil Crushing ) and we export about 300,000Mt that means the rest is always consumed domestically for Oil crushing , we keep ignoring this factor and this time it caught up with us. The Crushing crop in West Bengal and South India were short and they starting using other grades which resulted in some panic.

4:- African crop was not as big as it was assumed to either , from what we know they are out of stocks as well and that means the middle east demand has shifted to India. Egypt which traditionally buys 90% of Sudan seeds is running short on supplies and has been covering from India slowly.

5:- Stockist had covered material at higher levels at the start of season and after sitting on the stocks for last 6 months they see a glimmer of hope that they can make money , the weaker one's have already sold out but the stronger one's who hold the cargo can afford to wait a few more months and create a artificial shortage in the market.

I still believe there is enough raw material in the market for everyone but will it be available at cheap discounted prices anymore is a big question. Personally i doubt it. I also believe that if prices are too high the demand might slow down , although it has not been the case with many other commodities which moved up 50-60% in the last year , Guar , cotton, Mustard , Soya , Peanuts have all been bullish.

The point is there is no long term substitute to Indian Sesame even if the prices go crazy, who will sell cheap? Africa moves in tandem with Indian prices anyways , even if they are less by 5-10% how many buyers can switch their demand overnight and start buying from there. Its easier said than done. South America is way too expensive anyways and even if we reach their levels and the demand shifts there i doubt they have the capacity/stocks to full fill the increased demand.

Summer crop in India which comes out in May-June might help ease the prices or might add fuel to the prices . If the supply side remains quite for the next 1 month and stock inventory goes down then their might be a mad rush to buy the summer crop and that might trigger another bull run.

Overall i believe situation is still well under control , the prices reasonable and still no reason to panic. The buyer's have seen low levels for the past few months and now they can continue to buy a little more at current levels and still have a good average before things go out of hand.