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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,
Mohammad Abbas Minsariya - Panjetani Export
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. |
Panjetani
Dehydrate Export
