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,

Rajendra Bora,
Bora Agro Foods

Tell us what you are thinking – click here to comment on this article.

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.

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.

Other 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.

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.

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,

Rajendra Bora, Bora Agro Foods.

http://sesameseeds.bora.in/sesameseed/sesame-market-report-june-09.pdf