Global Economic Uncertainty

This may turn out to be a very unpredictable year due to economic uncertainty & insecurity prevailing in the western world. The repercussions of the recession are being felt by every person, irrespective of the country or profession they belong to.

Though it is difficult to comment on what situation may arise in the future, one thing is quite certain that a huge amount of ‘will power’ and effort will be required from every person across the world to help it come out of recession mode.

Coming back to Sesame Seeds…

Since the past one month, the market has been flooded with rumors regarding production figures of India’s New Sesame Crop. Even today, as the new crop has started arriving in the market, the confusion regarding crop estimate prevails.

Recently, the ‘Indian Oilseeds & Produce Export Promotion Council, Mumbai’ conducted a Trade Meet & and their survey projected the production of the Indian New Crop of White Sesame Seeds  at about 310,000 MT, about 20,000 MT less compared to last year.

We do not fully agree with their projections & expect the crop to be around 250,000 – 260,000 MT, which is about 70,000 – 80,000 MTs less compared to last year. The crop yield has been greatly affected by continuous & heavy rainfall, thereby reducing the production even while the sowing area (mainly in Uttar Pradesh state) was more than last year.

Factors Which Will Directly Impact Future Prices of Indian Sesame Seeds:

Demand from China

With more than 500,000 MTs of imports, China is the largest importer of Sesame Seeds in the world. China’s own crop last year was around 420,000 MTs, thus its total consumption was more than 900,000 MTs. & is expected to surpass 1 million MTs in couple of years.

Given its massive consumption, China is a very prominent factor in the world market for Sesame Seeds and can turn the tables for any origin. Last year, there was good demand from China for Indian Natural as well as Hulled Sesame Seeds. If the Vietnam route remains active this year too, then China may import good quantities from India, which will provide support to Indian prices. Though from the past experience, it is difficult to state when China would start buying.

Currently, the domestic demand in China is very slow & the stock levels are sufficient for them to prolong their buying to next month.

Production in Africa

Today, the total production of the African continent easily reaches 1 million MTs. This is a huge production figure and will as a counterweight to keep world prices in control.

This year, Sudan is said to be down by around 25% compared to last year. If this is true, then Turkey & Egypt will have to make some alternate arrangements to fulfill their requirements. India may have a good chance if such scenario arises.

Production in all other African origins is expected to be normal.

Mind-set of Buying Countries

It is observed that buyers are very hesitant to accept the high prices. So if Indian prices increase substantially, the resulting reduction in export demand will again soften prices.

Mind-set of Indian Traders & Stockists

Considering the less crop size, some traders & Stockists may become active & try to cover aggressively during beginning of the new crop, thereby supporting the market.

Currency Exchange Rate

The US dollar had appreciated mainly due to its shortage. If this continues in the future, export pricing from India will be more competitive.

Conclusion

Considering the less crop in India, China & Sudan, the Indian market may get support. On the other hand, low morale of the buying countries and huge back-up from the African continent will prevent any substantial increase in prices.

Regards,

Rutuparna Dole,

Bora Agro Foods,
Pune, India.

Website: www.bora.in

Email: web@bora.in

Dear Customers,

Hope you all are doing fine!

In our last report dated 23^rd March 2011, we had discussed about the market developments in the main Sesame producing as well as consuming countries. We had concluded that the prevailing market price is very attractive. In this short period, some developments have taken place in the Sesame market, particularly in India, and these are discussed below.

• The summer crop that everyone is looking forward to is estimated at around 60,000 MT, which is less compared to last year. This fall in yield is mainly due to weak prices & poor realization for farmers from Sesame cultivation as opposed to other commodities. Thus, the new summer crop looks inadequate considering that it has to support the market for 6 more months.

• Availability of good quality raw material is gradually becoming a huge problem. Today, availability of 99x1x1 quality in the market seems good on paper, but is disappointing in reality. This problem is not just with a specific quality raw material, but with all types of qualities.

• Around 8-10 days back, the market suddenly went up by 4-4.5% on account of some buying by the hullers. It is noticed that the hullers are not getting the raw material required in terms of both quality & quantity. Thus, they have increased the prices of their finished product and this has further pushed prices of the raw material upwards. As we had mentioned earlier, India has good demand for Hulled Sesame Seeds.

• The INR also seems to be appreciating against the USD & and has appreciated by about 2% in the in the last 10 days.

Conclusion

Despite the market appreciation during the last week, we are still of the opinion that the current prices are at a fairly good level for buyers to cover their future requirements.

The prices are not expected to drop below current levels due to the factors mentioned above, but at the same time, we do not expect the market to go up substantially either. All other origins have remained quite firm & steady.

Best Regards,

Rutuparna Dole,

For Bora Agro Foods,

Greetings!

Sesame markets worldwide are currently going through a hibernation phase with demand being very slow from all buying countries. We would discuss the market scenario with respect to major exporting & consuming countries as below:

China

The Dragon of Asia was short on supply this year, but rather than buy aggressively, China tried to cover its requirement gradually without fueling the world market. In the initial months of the new crop, Ethiopia was going through the initial turbulence of the Commodity Exchange Board at that time, so China covered its requirements mainly from Sudan & Nigeria.

As we all know, Africa is China’s favorite supplier due to abundance of raw material, import duty benefit & above all, good taste. These factors have put Indian Sesame Seeds at the last position in China’s shopping list.

In the past 3 years (including some period of this year), the demand from China for Indian Natural Sesame Seeds have been very poor, and thus, prices of Natural Sesame in India remained weak due to lack of Chinese support.

The growing Chinese demand has not left any African origin unexplored. Even sources like Somalia are gaining ground in China and prices have shot up as a result. Thus, it would not be wrong to state that except India, the Chinese demand has supported all other major origins.

Currently, the demand for Sesame Seeds is very slow in China & huge stocks are reported to be lying at the port, waiting for the buyers to accept them. Good quantities in transit are expected to reach China soon, thus major import demand from China is not expected in near future.

India

One of the largest exporters of Natural & Hulled Sesame is slowly losing its ground in the international market, especially for Natural Sesame Seeds. This year the crop was not was not good enough in terms of quality & production, but even then, the prices did not get the expected support. The reasons for this have already been cited above.

The only demand seen this year for Indian Hulled Sesame Seeds world-over was mainly from the USA market. Today, India is the most competitive origin available in the world for good quality Hulled Sesame Seeds. Other competition origins like South & Central Americas, Africa etc. couldn’t compete with India due to their high cost of raw material. Thus, it can be said that Hulled Sesame seeds saved the face of India in the international market.

Considering the world market scenario, we don’t find any reasons for the Indian Sesame Seeds prices to firm up in immediate future, but the demand for Hulled Sesame Seeds will surely remain with India.

The stock levels in India are not very good & getting good quality 99×1 is a problem. Currently the market is weak & the traders & intermediates are selling their stocks in panic, eventually affecting the market adversely. The current prices in India are very attractive for the buyers.

The Indian summer crop is will be harvested by end April / May & everyone is looking forward for it. It is difficult to comment about the sowing area as farmers are opting for other options due to poor realization during this crop year.

Africa

The demand is slow for the moment. Stock levels are reasonably good, thus Africa can supply good quantities for coming months. Prices have softened a bit mainly with Sudan, but Ethiopia still remains around the level of USD 1360 FOB. Africa is the origin buyers would look forward to.

South America & Central America

These countries are facing very tough competition from Indian Hulled Sesame Seeds & have also lost some share to it. The price of raw material is very high at the moment, making it quite difficult for them to sell their product. Unfavorable political situation in some countries is also leading to in consistency in their supplies. Buyers in USA are getting uncomfortable due to uncertainty in export policies.

Other Origins

Demand for Pakistani Sesame is slowly growing as they are able to offer natural sesame seeds & the taste of the same is preferred by Chinese. Unfavorable weather led to poor production last year, but the sowing & production in expected to grow in coming years.

Conclusion

In view of the above, it seems that there would not be much momentum in the Indian market in coming days & good quality Hulled Sesame Seeds will be offered at competitive prices resulting in good demand for it. The current prices for Hulled are very attractive compared to what other countries are pricing similar products.

Best regards,

Rutuparna Dole,

Bora Agro Foods,

We all are aware of the shocks & surprises “Sesame Seeds” is capable of giving. This new crop year was also no different with very high volatility at the start of the season which kept everyone confused about the prices as well as their buying & selling strategies for the coming months.

This year, many importers were looking for news about the New Crop in India, especially in the backdrop of the news that China crop was in deficit of at least 30%.

Even though the export demand for Indian natural sesame seeds has gone down in the last 2 years; India is still one of the major producer & exporter of Sesame seeds in the world, offering a quality product at very competitive prices, especially for Hulled sesame seeds.

Indian Sesame Seeds: The New Crop Story

The harvest had started 20 days ago but the arrivals increased only in last 10-12 days. The product quality is much better than the last year & good quantities of 98×2 and 99×1 type cargo can be available this year. The hullers will have better quality raw material for processing which will result in good quality finished product i.e. Hulled Sesame seeds.

There was lot of rumors about rains in many growing areas, and thus, everyone was confused about the production figures for the New Crop. Though it is not possible to accurately settle down to any exact figure, the information available from various sources suggest that the Indian crop should be around 300,000 to 315, 000 tons. This is not an impressive figure but it is better than last years’ sesame seed production.

IOPEPC, Mumbai carried out a survey with their own people, and estimated the crop size at around 375, 000 to 400,000 tons. In reality, most of the Indian exporters, traders & farmers that we have spoken to, do not agree with these figures. The reason we have mentioned this is because we want everyone to know the developments taking place related to sesame seeds.

The farmers are hesitant to sell at lower prices & accordingly adjust their arrivals in the markets. The arrivals will be slow in coming days due to “Diwali festival” during early November. The markets are closed during this time & people are in holiday mood.

International Market:

• The African prices of Natural sesame seeds are very firm & are quoted above USD 1450 PMT FOB level for Sudanese & Ethiopian natural white sesame seeds.
• The new crop in Africa will be harvested by end of November & prices of this new crop are not expected below USD 1350-1400 PMT FOB.
• The crop in China, which is one of the largest consumer of sesame seeds in the world is down by minimum 30%, thus, they will require around 350,000 – 400,000 tons (they import around 250,000 to 275,000 tons in normal course & about 125,000 – 150,000 tons on account of crop deficit this year).
• From the data available, China prefers to buy about 70-80% of its requirement from Ethiopia. Thus, if we assume that China would continue this buying pattern, the prices of African origin seeds should remain firm.
• It has been noticed that in the past few years that demand for African product is increasing due to various other factors, which has created markets for even small African origins & their prices have firmed up.
• If prices of the largest producing country “Africa” (considering Africa as a single country) are expected to remain firm; then even India, which too is also one of the largest producer of Sesame, should continue to have firm prices, too.
• The “Korean Tender” requirement is another important factor which can further support the Indian market. It expected that India will have very good chances of winning the Tender henceforth due to good quality & competitive prices compared to African origin.
• There are absolutely no carry forward stocks at most of the origins, thus, only the new crop can offer some support.
• All the buyers are covered hand to mouth & would require goods for November/ December & onwards, thus, there will be good demand.
• If China comes into the market to cover-up their requirement, then the market may get support & prices may suddenly go up.
• While we cannot comment on the China’s timing to start buying, the latest news available with us is that the Chinese are in market for fairly good volumes. But due to change in trading mechanism in Ethiopia, (they have made it mandatory to deal all the Sesame seeds trade through centralized commodity exchange) not many major contracts are concluded. It is expected that in about 10-12 days’ time, the exact mechanism will be finalized in Ethiopia.
• India is the largest producer & exporter of Quality hulled sesame seeds at a very competitive price. At present, there is exceptionally high demand for good quality & as a result, a scarcity/ spot shortage of the same, but we expect the situation to normalize in next 3-4 weeks’ time.
• At present price levels of USD 1750 – 1850 PMT FOB, there are good & firm enquires for near term shipment for next 3-4 months.

Conclusion:

We expect the market to remain firm & steady. We don’t expect the market to get bearish, but nor do we anticipate too much bullishness as it would slow down demand.

As usual, currency fluctuation is a vital influencing factor.

Bora Agro Foods,
Pune, India.