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.