Sesame Seeds Market Report – April 03, 2012

Dear Customers,

The market for Sesame Seeds had been relatively steady and there have been no major price changes since the start of the new crop season in October 2011.

Slow export demand from all major buying countries, primarily China & Europe, was the most important reason for the market to remain quiet. India’s export to China suffered this year, as China reportedly purchased most of its requirements from Nigeria & East African countries in the initial months after the new crop.

Volatility of Indian Rupee

If you carefully observe the price trends from October 2011 to February 2012, you will notice that any rise or fall in prices mostly coincided with the volatility in the USD-INR exchange rate. The actual raw material prices for Sesame Seeds have hardly changed during this period.

Since last couple of months, we have been regularly stating in our emails & reports that the raw material stock in India is poor & the quality also is not upto mark. The actual reason for such inadequate level of raw material during this period of the year is due to decreased production during the new crop harvest in October 2011.

Market Developments in the Past 10 Days.

The ongoing stable trend in the market has completely changed during last ten days, wherein, it was noticed that actual raw material prices went up substantially in a very short span of time due to panic buying.

Below are the market developments during last ten days and our corresponding comments:

  1. The market appreciated by 11 – 12% in a very short span of time.
  2. Panic buying by exporters & buyers was one of the important reasons for the price rise.
  3. It is a well-accepted fact by everyone that the actual raw material situation is not good, thus it will be difficult to find good quality product in future. Thus, many exporters have jumped into the market to cover up whatever they had sold at lower prices. At the same time, the buyers who had immediate shipment requirements became insecure & tried to contract as much as they could. This kind of panic buying had a multiplying effect on the market, leading to the 11 – 12% rise in a very short span of time.
  4. The market was subdued only because of slow export demand, as the stock position in India is not very encouraging. Thus, a small demand was enough to fuel the market. While we were expecting a rise in prices when demand came, we never anticipated such a high rise within such a short span of time.
  5. Even though this rise is based on fundamentals, an element of speculation was evident in the price rise of about 4% that occurred in the last few days.

Current Situation:

After a rise of 11- 12% in a period of just 10 days, the market has steadied, but the demand has slowed down. Both, the exporters & buyers are feeling uncomfortable to keep on buying at such high levels – especially when such a high rise is been experienced in a period of just 7 days.

Our Views:

It is very difficult to predict the market trend in near future, given the current volatility, so we lay our analysis as follows:

One has to understand the fact that the stock position in India is not good & the quality available is also not upto mark. This factor alone is enough to support the prices.

On the flipside, it is very important to understand that the export demand from all major buying countries has been slow. Thus, if the prices remain high, the buyers may further postpone their buying decisions or may reduce their consumption. This might again lead to softening of the Indian prices to some extent.

Through this report, we would like to bring to the notice of our clients that since the current rise in prices seems to be supported by fundamentals, we don’t expect the prices to go down in a big way. Thus, if the Indian prices soften a bit in near future, it would be a good opportunity to cover up your requirements.

Best Regards,

Amrut Bora,

Bora Agro Foods,

Pune, India.

Sesame Seeds Market Report – October 2011

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,

Amrut Bora,

For Bora Agro Foods,
Pune, India.

Sesame Seeds Market Report (Update) – April 2011

Dear Customers,

Hope you all are doing fine!

In our last report dated 23rd 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,

Amrut Bora,

For Bora Agro Foods,

Pune, India.

Sesame Seeds Market Report – March 23, 2011

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,

Amrut Bora,

Bora Agro Foods,

Pune, India.

 

Sesame Seeds Market Report – November 02, 2010

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.

Amrut Bora,

Bora Agro Foods,
Pune, India.

Sesame Seeds – Market Report – August 2010

The sesame market has again taken everybody by surprise. The market has firmed substantially during last month on rumors about the Chinese sesame crop being hit by heavy rains & floods. It is projected that this year the Chinese new crop will be at least 25% less compared to last year.

The African origins were the first to firm up on hearing the news about China & later India also joined the group. In regard to India, it was not only the China factor but the poor monsoon due to which there was complete uncertainty about the new crop.

As we all know, Sentiments are stronger than logic, and thus, before anybody could figure out what was happening, the prices went up by more than 15% within a week’s time.

Monsoon in India

The monsoon situation in India has significantly improved in last 10 days & currently, the Indian market is firm & somewhat steady with some movement of 2-3% either ways. Just for your information, a Korean Tender of 7000 MT has been announced & there are very good chances that the Total Quantity would awarded to India. A support to the prices is expected.

As we all know, it is not possible to time the market & confidently comment on the future price trends but what we can do is assess the current & likely trends which might facilitate all of us to somewhat plan our future business strategy.

We offer our comments as follows:

  • It is confirmed news that this year, the new crop in China will be at least 25% less than last year. Many sources assess the deficit to 40-50% but since it is too early to reach conclusion, we would be going by a modest figure of 25% deficit.
  • The prices at all African origins are very firm. No doubt, the prices will calm down from the current levels on arrival of its new crop in November but one should not expect the prices of the new crop to open below USD 1150 PMT FOB. Thus, if the prices at one of the largest sesame growing country (I have considered Africa as a country) remain firm, then it is surely going to have an impact on the prices worldwide.
  • This year, there is confusing news about the sowing in India as well as the production estimate. But looking at the poor realization to farmer during last year, one can assume that the sowing will be less. In regard to production / yield it is difficult to comment as it is too early. Overall, in the current scenario the new crop size is said to be similar to last year or slightly lower. Here, it is important to note that last year the Indian crop size was said to be around 250,000 MT, which is not a good quantity.
  • Other small world origins like Pakistan are also said to be hugely hit by the floods & heavy rains. This might get some additional pressure on the prices.
  • There is some news of crop damage in Myanmar but it is still not confirmed. If you have any good sources please check & let us know.
  • The carry forward stock situation is also not very encouraging. Similarly, the buyers are buying hand to mouth & do not have huge covers. They will need cargo for September & onwards.

In view, of the above factors, we don’t expect the prices to go down drastically during the new crop. Rather, there are good chances that the market may get support after the initial calm after the arrivals.

Note: The exchange rate is also an important factor to watch.

Best regards,

Amrut Bora,

For Bora Agro Foods,
Pune, India.

Sesame Seeds Market Report – April 01, 2010

The market has been giving confusion signals from the start of the new crop in October 2009. The volatility in prices has left the buyers confused on their buying decision, and furthermore, cheap offers from various exporters from India have added to the confusion.

Many reasonably good Indian Manufacturer-Exporters started offering unrealistic prices just to compete with the cheap offers coming from other small time Indian exporters. This led to a price war, in which many of the buyers compromised on quality & went for prices.

In last two months, the market has been showing weak sentiments on account of poor domestic & export demand. About 10 days back, the market saw a sudden, drastic correction of around 6% in a very short span of time. However, this was an unrealistic correction – as there was no development in the market to support such a change in prices.

This correction indeed proved to be unrealistic and the market recovered completely, i.e. the market increased by 6% from the recent fall.

The summer crop, which everyone is looking forward to, is not as good as last year’s crop. Many farmers have shifted to other crops due to poor realization from sesame seeds, from start of the new crop.

While it is difficult to comment on the actual yield of the summer crop, the sowing area is confirmed to be less as compared to last year.

Exchange Rate is another important factor which is playing a vital role in deciding the export prices. Since February 2010, the Indian Rupee has appreciated by about 4% & this has really affected the export costing.

Further, today Indian Natural white sesame seeds (hulling quality) are priced at USD 1170 per MT, delivered to our factory, which is a reasonably good price according to us. A substantial correction from the current level is not expected.

Our Conclusion

In view of above, we expect the market to remain stable, or get some support at the current levels, but we don’t expect a drastic rise in prices. It is difficult to comment on the long term view as the prospective demand trend is yet not clear.

Best regards,

Amrut Bora,
Bora Agro Foods,
Pune, India.

Disclaimer: While the above mentioned predictions are based on rational thoughts & observations, the actual situation may not be the same. This is our personal view of the Sesame Seeds Market in particular and on agricultural products in general.

Sesame Seeds Market Report – November 2009

It is November end & the trends available in last 45 days reveal following facts about the international market of sesame seeds:

  • The crop size in India is definitely around 15 – 20% less than previously estimated. This fact is endorsed by the present arrivals in the marketing yards of growing areas.

  • The crop in Myanmar is damaged to major extent. As a result, China will have to buy an additional quantity of 80,000 to 120,000 tons from Africa and this will continuously support African sesame seeds. The availability of crushing quality, which is also suitable for hulling, is under pressure.

  • The US Dollar has devalued against Japanese YEN, Korean WON & almost all other major currencies (including EURO, GBP etc.) across the world by around 15 – 20%. Hence, the price level of USD 1440 – 1450 PMT in Africa is at par with USD 1200 PMT, if we consider the impact of devaluation of USD.

At the same time, everybody is uncovered for the rest of the crop year. They have to consistently buy at the prevailing prices as they cannot defer their purchases anymore because of the threat of physical shortages.

The demand of Asia is growing rapidly by at least 8 – 10% p.a. & the CAGR effect is a huge one.

  • Sesame prices at USD 1450 per MT (for natural) & USD 2100 – 2200 per MT for good Hulled Quality is not at all expensive. We consider this a fair price considering the price rally in agri commodities.

  • The Korean tender results were out yesterday, and the bids were between USD 1530 – 1630 per MT. It is important to note that last time, the Korean Govt. decided to wait for a better price even though the prices quoted were in the range of USD 1450 – 1500 PMT & they postponed the procurement of a major quantity. Unfortunately, it appears that they have lost the last opportunity to procure at a competitive price.

In my last market update, I expressed the view that the Indian exporter’s community is not matured enough & gets carried away very easily. At that time, Indian hullers were quoting a price of USD 1650 – 1700 per MT level.

Unfortunately, the buyer’s community did not realize that sesame was more than cheap at that time & opted to wait for further price reduction. Today, I have to regretfully say that this too, was nothing but an ill-advised move on the part of buyers, especially from developed world. They remained uncovered, irrationally expecting the prices to crash further. I am aware that this is a bold statement, but regrettably, it is the fact.

It is very unfortunate that they don’t understand if the sesame is priced below aforementioned level, farmers will shift to other crops. Even at this price level of USD 1400 – 1500 per MT, it is not a duly rewarding crop for the farmers to retain their interest in cultivating sesame. If this situation endures down the line, the sesame crop disappearing from the planet is not a distant reality.

As per my personal estimates, the present deficit in supply is almost 12-15% in world trade of 1 million tons.

To conclude, it appears that Natural Sesame will remain steady at USD 1350 – 1500 level & Hulled at USD 2050 – 2200 PMT level.

 

Best regards,

Amrut Bora,
Bora Agro Foods

Disclaimer:This is our personal view of the Sesame Seeds Market in particular and on agricultural products in general. While the above mentioned forecasts are based on rational thoughts & observations, the actual situation may not be the same.

Sesame Seeds Market Report – October 2009

New Sesame Crop in India

The new crop was harvested in the last fortnight & as usual, everybody is trying to figure out the price trend – not only for next couple of months but also for the rest of the year.

The price of Natural 95 x 5 quality suitable for hulling is at present USD 1175 PMT FOB which couple of days back was USD 1110 pmt fob. This might be a result of following:

  • Arrivals are not picking up as expected.

  • Farmers not willing to sell at this price level. They have seen much higher price & are aware that if they convert it into cash, it may be spent for improper reasons. So instead of realizing at USD 1050 – 1100 level, they prefer to hold it.

  • Korean tender of 9000 tons is round the corner.

  • As usual, the warehouses of most of the end users & intermediates are empty & India is the only supplier before December 1st half.

  • Most of the currencies across the globe have appreciated substantially against USD which improved their buying power.

Panic Selling by Indian Exporters

In first few days itself, the Indian exporters panicked as usual & started offering very cheap prices especially for hulled sesame seeds, ranging from USD 1620 – 1720 PMT FOB.

Even though there is no doubt that prices will remain low as compared to last year, we think it was absolutely immature behavior on the part of these exporters.

The prices of all other agri-products like lentils, pulses, beans, rice etc. and also other agri-products are very high because of huge consumption in Asia (4-5 billion people). The prices of potato, onion, fruits & vegetables have also gone up by more than 200%. Yet, the price of sesame has remained flat during the last year.

Unfortunately, the farmers in India are going away from sesame crop every subsequent year due to poor realization of just USD 1050 – 1100 per MT. It is our personal view that this is an extremely poor reward for the farmer’s efforts.
India is therefore, becoming an importer of natural white sesame for hulling purposes like China & also to cater its huge domestic demand.

It is only due to larger production in Africa that sesame seed is available to the world. Otherwise, sesame would have been a scarce commodity for all of us.

Considering the above points, we believe that the prices in India will remain firm. They will not soften the way it was expected in first half of October, and also will not move upwards exorbitantly.

Sudan – Ethiopia & China

There are lot of confusion about Sudan & Ethiopia & there is a collective forecast of 375,000 – 460,000 tons. If it is more than 430,000 tons, the global prices may soften after December /January 2010.

But again, the China factor is an important one. Nobody can predict how much China would buy, but everybody is confident that they will buy more than 200,000 tons.

The Chinese crop appears to be better, but the deficit in Myanmar may neutralize this marginal increment.

The world economy is improving slowly & the sentiments are not bearish. The morale is much better as compared to November 2008.

Forecast:

It is difficult to predict the future, but we expect that:

  • There will be good movement in India & the prices may remain volatile before November end /December 1st week.

  • The prices may remain a bit weak in view of the better availability after December.


News: 10th Award for Highest Export of Hulled Sesame Seeds from India (08-09).

We take immense pleasure to inform you that “Bora Agro Foods” has been awarded as the highest exporter of Hulled Sesame Seeds from India for the 10th consecutive year by Indian Oilseeds and Produce Export Promotion Council (IOP-EPC), Mumbai, India on 1st October, 2009.

On this occasion, we take the opportunity to express gratitude towards all our customers for showing immense confidence in us & offering their unwavering support.

We look forward for your co-operation & assure you of the best quality & service at all times.

Best regards,

Rajendra Bora,
Bora Agro Foods

Disclaimer: While the above mentioned predictions are based on rational thoughts & observations, the actual situation may not be the same. This is our personal view of the Sesame Seeds Market in particular and on agricultural products in general.

Sesame Seeds Market Report – June 2009

Dear Customers,

Abnormality has become a normal thing in the Sesame Seeds market these days.

This crop year, i.e. October 2008 to September 2009, is again appearing to be an unusual one. In November – December 2008, most of us were expecting a substantial correction in prices due to a fairly good crop especially in the continent of Africa.

However, during October – November 2008, the prevailing prices were high because India was the only source. Warehouses of most of the end-users were empty by then & due to physical shortage at their end, almost everybody was looking for immediate shipments.

During all these months, due to high price level, everybody was procuring hand to mouth & not only buyers but also the suppliers were expecting the market to cool down especially after January 2009.

In recent years, it has been observed that Chinese demand slows down after their New Year festival in January & February. As a result, the supplier community in India also opted to hold moderate quantities in view of the likely correction.

But strangely, China bought sizeable a quantity in February & March which gave good support to the African market – especially Ethiopia & hence, the sentiments of African exporters became bullish. Again in April & May, it is understood that China bought around 35,000 – 40,000 tons from Ethiopia.

If we closely analyze this buying pattern, we have a reason to say that they were fairly aggressive even after February unlike earlier years. Most analysts believe that China will buy not less than 40,000 – 45,000 tons more from June thru September end.

Based on this estimation, a correction in Ethiopian prices seems unlikely. On the contrary, the present stock level in Ethiopia is fairly low. We estimate this to be between 25,000 to 28,000 tons. If this is correct, a price hike of 5 – 8% in July / August cannot be ruled out.

In November & December 2008, it was estimated that Ethiopia & Sudan will harvest a bumper crop & the market would definitely see a bearish trend.

Unfortunately, looking at the actual export figures to this date, coupled with present stock level, we have a reason to believe that the crop estimations were on higher side by around 12 – 15%.

The scenario in Sudan: This year, Ethiopia was a prime source for China & Israel, whereas the requirements of the Middle East, Gulf & Mediterranean were taken care by Sudan.

Before 2003-04, India used to have a fairly large crop & it was catering to most of the requirements of Egypt, Turkey & Syria etc. But the size of Indian crop is shrinking rapidly & nowadays it can hardly spare any cargo for these traditional buyers.

So these countries were left with no alternative but to rely on Sudan as a prime source. This offered consistent support to Sudanese prices even at USD 1350 – 1400 PMT.

The stock level in Sudan is better as compared to Ethiopia and analysts estimate it to be between 40,000 – 45,000 tons.

But considering the following facts, we don’t see a substantial correction in prices. On the contrary, a firm trend till the harvesting of the next crop is most likely.

  1. Sudan & Ethiopia will harvest their next crop in November 09 & will be ready for shipment in December. So till then they have to survive with the present combined stock of around 75,000 tons.
  2. The demand for the holy month of “Ramadan” from countries of the Middle East & Gulf will not be less than 40,000-50,000 MT & they will mostly have to procure the same from Sudan.
  3. Considering this demand of China, Israel, Gulf, Middle East & the Mediterranean, this stock level of 75,000 – 80,000 tons in Africa is not too big.
  4. Apart from the above, summer crop in India is of about 60,000 to 70,000 tons & at least 30,000 tons of this will have to be spared for domestic consumption till mid October.
  5. From the observations of last 4 – 5 years, it is evident that the domestic consumption in India is growing by at least 10% as it is second fastest developing economy in the world with 1.2 billion people.
  6. The remaining 40,000 tons will be used partly by hullers to cater the demand of the western world which is buying around 6,000 to 8,000 tons of hulled sesame seeds per month.
  7. In addition to this, Korea normally procures 5,000 – 6,000 tons PM from India. Recently, a tender of 9,000 tons was awarded to India & a few more tenders are expected to the floated before October 2009. So the aggregate off-take by Korea will not be less than 12 – 15,000 tons apart from the current tender that will ship from the present summer crop.

Considering the above factors, even the new Indian summer crop will not be able to cool down the sesame seeds market.

Out of the world population of 6.5 billion, Asia alone is home to 4 billion people. People in developing nations are increasingly opting for jobs in the rapidly growing organized sectors such as manufacturing, infrastructure & services. These sectors offer them consistent & assured returns as opposed to the un-predictable income & un-organized nature of the agricultural sector.

Growing urbanization in developing Asian nations coupled with decent disposable incomes has ensured good demand for various commodities irrespective of their high prices. Thus, we expect the prices of sesame seeds along with other products such as rice, sugar, pulses, edible oil etc. to remain high most of the time in the coming years.

After going through the above report, one may think we are trying to portray a bullish scenario for sesame seeds as well as other commodities. But this is a critically analyzed truth.

In fact, we will be happier if the price level of sesame seeds remains low. This will boost demand and the size of investment will also be significantly lower. Unfortunately, it appears that we all will have to live with these harsh facts in the years to come.

Best Regards,

Amrut Bora,

Bora Agro Foods.

Important Note: Uncertainty prevails regarding the arrival of monsoon in India. It has already been delayed by 2 weeks. The impact of this serious factor has not yet been considered in this report and this is a matter to be tracked duly.


Disclaimer: While the above mentioned predictions are based on rational thoughts & observations, the actual situation may not be the same. This is our personal view of the Sesame Seeds Market in particular and on agricultural products in general.