Like to discuss some of the statements that you presented in this report-

> Europe has been silent – that is correct.

> China has been silent – that is truly not correct. They have been buying backdoor to save import duty via VIETNAM Route which is very well known. Since this winter crop, over 50 k tonnes were routed from Nhavasheva and Mundra Ports to Vietnam – if data intelligence is reviewed properly. Efficiently Indian exporters and Chinese importers have been supporting each other silently to make mutual profits, and that was the main reason of silence in direct Chinese demand this year.

> Raw Material Stock – Overall India has good inventory of Natural Sesame Seeds for Hulling and there is no shortage or decreased production.

The stock levels are not poor with factories doing mass production in M.P. like Gwalior, which are capable to hull anything these days. Moreover their consortium opens the Indian market price daily, which describes the power they hold in Indian Sesame industry. These factories solely form the basis to meet Chinese & Mediterranean demands, as they sell huge volumes locally to re-processors & exporters. They only make low to medium quality and efficiently meet the needs of price sensitive markets.

Since the best quality Natural Sesame Seeds for Hulling was procured by strong companies & stockists, now THERE IS SURELY SOME SHORTAGE OF SPOT SELLERS FOR THIS BEST QUALITY BUT ONLY DUE TO CONTINUOUSLY GROWING MARKET. If we go back 10 days when the market was stable, these stockists and traders from Rajasthan & Gujarat who are known to give best material were easily supplying ample inventories for factories like yours and yours.

> Decreased Production – Not Correct as we all have substitutes.

There was an increased production only at best quality supplying destinations this year like Rajasthan, so we need to correct our facts regarding the decreased production. Besides stockists are still coming out with their old crop carry forward stocks that is nowhere accounted for. As per our earlier comment on 6th November 2011 on your blog – this is well proven!

Though there was a decreased production at U.P. & M.P, this did not impact much as India had a bumper crop of Black/Brown Sesame from South India, Maharashtra and Bengal.

All of us know that the trade has become dirty – with not only U.P, M.P factories but also some reputed GUJARAT factories are using cheaper substitute by hulling Rajasthan Black Brown/ Orissa Brown/ Andhra Brown/ Karnataka Brown and further doing acid wash to make white hulled & selling to Premium markets. Though this cannot go for long as someday buyers will realize, but people have found a solid substitute with cheaper costs and a new source of minting money.

So, the growth of this Black Brown segment going to Hulling out-passed and fulfilled the requirements of areas that gave less production during last year regular Winter Crop.

Besides, the big factories like yours and ours have imported a lot of Natural Sesame from other competitive origins globally. What we should have bought from India, has been sourced from other origins and put less pressure on Indian Crop already. This is nowhere accounted for!

> What happened in last 10 days:

(1) Panic: The big buyers are still short and no one is in panic due to correctly mentioned slow sales in U.S./Europe. The people who were hesitant to book at 1600-1700 USD levels, why would they jump in an overaggressive market that jumped overnight to 1800-1900 USD levels? The panic in Indian market was created by local brokers & local Gwalior industry with support of giant shippers to push their obsolete stock and settle their pending contract due to slow sales.
THE PANIC IS NOW HERE IMPORT RELATED, MORE SPECULATIVE AND PURPOSELY GENERATED TO GENERATE MASS IMPORT INTEREST.

(2) Raw Material Situation: In our experience, whenever market is moving up – people get blind and same story repeats that there is no sesame in India. But always there is raw material availability which is offered at XYZ price.
There are no discussions of recent summer crop which is going to be harvested in earlier May and other Bengal Brown crop which will meet the raw materials needs additionally. During these arrivals, all old 99/1 type winter crop stock will come out for best hulling and new summer arrivals will be best substitute for Korean Tender or other Natural shipments. This will ensure adequate supplies for raw materials’ good enough o make Premium for all of us.

(3) Slow Demand: When there was a slow demand during Jan-Feb, some big trading houses and brokers bargained a lot of Hulled contracts around 73000-75000 INR per metric tonn from local Gwalior market.

However, big player’s shipments remained unsold till March as big buyer China faced uncertainties due to arrest of Vietnamese smugglers, while Turkey & Middle Eastern countries were getting cheap sesame from small factories directly due to financial year closing time as these people need to boost their sales for bank credit limit renewals.

As the Hulled from these Gwalior base factories cannot go to U.S. & Europe, because of unhygienic processing & risk of return shipments. These big players were again in a fix to manage their unsold cargo and push some sales, and solely for this they fuelled the market and bought the heat.

These people strategically bought momentum by slowly starting to buy again at INR 78000, 81000 etc. and so on.Through increased price they were able to settle their old contracts at good profits and besides they again re-invested their earned profits to buy new contracts at higher prices that bought the actual momentum with stability.

Correctly mentioned no one estimated that their game fall in place correctly!

> What will happen in future?

We further believe that people will adopt wait and watch approach as high value oilseeds demand has been slow this year due to global slowdown and economic uncertainties. If prices keep on increasing and cross 2000 USD levels, the demand will shift to cheaper substitutes.

It is very tough to command up or down trends in future, when speculation is so heavy. But logically analysing all the above mentioned incidents with a slight different set of fundamentals- we believe that once summer crop will come and arrivals will start, the prices should be a little soft. Though the prices cannot fall overnight as increased, but some calmness is very much due in the market!

If not anyone else, the local big players will again be needing stock to participate in Korean Tender and to play with Crushing Natural and they know very well to turn the game in their favour.

Thanks.

Nicaraguan white hulled sesamseed is of a premium quality

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