The Sesame Market is slowly getting back on its feet after the prices the prices were thrashed to the bottom of USD 950/- per mt. The reason being the Sesame Consuming Whale is now back into action. Recovering from its Post Covid Crisis, the sesame trading quantity in China is not back to normal of over 2500 mt per day, however, the high inventory levels at the port raise concerns.
Lets see how the Covid – 19 pandemic affected the Summer Crop of Sesame Seeds at the origins and destinations: –
China: –
The opening stock at the ports at the beginning of January 2020 was approximately 100,000 mt however the stock during mid July 2020 was around 180,000 mt. So far in 2020 the Republic of China has imported approx. 500,000 mt leading to an average consumption of around 67,000 mt per month. The country buys huge quantity from Tanzania and Mozambique during the new crop in May. In 2019, China bought close to 75,000 mt and 100,000 mt from Mozambique and Tanzania respectively. It is expected that 2020 import figures will be identical to the previous year number. The demand was very weak during the month of May & June showing after effects of the Virus whereby the incoming cargos were much higher than local consumption within the country causing a sharp decline in the prices.
The falling prices were supported by the government of China by promoting street food, small businesses and also increasing the funds availability. Coupled with the government initiatives, the heavy rainfall in major Sesame producing regions supported rise in price. Though it is too early to quantify the damage but a significant damage over 25% of the produce may change the price dynamics. On an average China produces around 300,000 mt of Sesame Seeds.
The Upcoming Mid-Autumn festival may increase the demand.
India: –
The Indian Summer Sesame Crop is concentrated in mainly 2 regions namely Gujarat and West Bengal. In 2019, Gujarat summer crop was approximately 35,000 mt whereas in 2020 it was expected to be 100,000 mt. The local markets have already received over 85,000 mt towards the end of harvest for the Summer Crop so we expect to reach close to the expected output. Black Sesame account for approximately 10% of the total production in Gujarat. Last Year, West Bengal produced around 250,000 mt, however this year expected to produce around 150,000 mt on account of rain damage.
The global demand for Hulled Sesame Seeds is expected to be lower by 15/20% on account of inoperability of the bakeries and confectionaries that use the Hulled Sesame for decorative purpose. The revival of demand is expected to take place towards the end of the year.
With regards to the imports, approximately 500 FCLs have been traded from Tanzania and Mozambique combined for India.
Sowing figures of India as per Gujarat Government for the Winter Crop as follows: –
| Average Sowing Area for the last 3 years (in Ha) | 102,117 |
| Sowing Area in 2019 (in Ha) | 39,364 |
| Sowing Area in 2020 (in Ha) | 119,124 |
Mozambique: –
There is not a clear crop information system in Mozambique however an assessment of exports can provide a reliable estimate. The 2019 estimated production in Mozambique was around 75,000 mt with the presence of 1 Hulling factory. In 2020, the number of Hulling factories has increased to 2 and the production estimate shall be around 80,000 mt which is both the central and north regions combined. The arrivals have slowed down post mid-July as over 85% crop is already in the hands of the exporters.
The quality of cargo in 2020 is very good and the moisture is largely under control, however, the admixture is a big challenge this year which was between 5/7% leading to increase in cost to the exporters. In 2020, a large amount of cargo was also received from the Zimbabwe-Mozambique border. The estimated production in Zimbabwe is expected to be around 25,000mt.
The effects of Covid-19 were clearly visible and Mozambique exporters face the following hindrance to export: –
- Lack of Local Currency
- Local Transportation
- Lack of Empty Containers
- Lack of Space on Vessel
All these issues are expected to aggravate once the arrivals and export of Pigeon Peas begin in Mozambique.
Tanzania: –
Tanzania is a producer of both Mixed and White varieties of Sesame Seeds. The White variety is mainly produced in South and the Mixed in North. However, in 2020, there was a whitish variety available for export from the North of Tanzania which is not regulated by the government. This variety was trading at a premium of USD 40-50/- pmt than the Mixed Variety. The total production in 2019 was around 125,000 mt and the same is expected to be around 132,500 mt in 2020.
This year there was a lot of confusion in the auction system between the online and Village Auction System which led to double selling, the same is getting rectified now.
Following are the challenges faced by the Tanzania Sesame Sector: –
- Port Congestions
- Vessel Re-scheduling
- Changes in Vessel Route
- Lack of availability of Empty Container
- Courier delays to send the documents to Customers
Apart for the above-mentioned challenges, the adulteration at the farmer level was also a major hindrance during the 2020 season.
Uganda: –
Uganda produces Sesame Seeds twice a year viz Minor and Major Season. The Minor season harvest is during July/August and the production is around 6000/8000 mt whereas the major season harvest is during October/November and the production is 30,000/35,000 mt. The minor season harvest is mostly used for the domestic consumption.
The Sesame production in Uganda is a function of the competing crops such as cotton and Pulses, since the price is good and expected to increase in the coming period, the production of Major Season can be close to 35,000 mt and the export quantity of around 25,000 mt.
Due to Covid-19, many people working in informal sectors have lost their jobs, there has been an increase in the return of people to their villages. This is expected to act as a catalyst leading to increase in production in 2020.
Pakistan: –
During the sowing period in 2019, the production estimate in for the Pakistan Sesame Seeds was around 100,000 mt however due to the damage the actual output was only 41,000 mt. With the absence of any bad news and following good production conditions the crop estimate for 2020 is over 100,000 mt. Covid-19 effects coupled with the currency depreciation resulted in the sharp fall in the prices.
A new Opportunity opened up when in January 2020, China entered into Duty Free Agreement with Pakistan to give duty free treatment to the items imported from the country. The materialisation of DFT agreement with China will help increase the export of Pakistan Sesame Seeds to China.
Japan: –
The total consumption of Japan in 2019 was around 160,000 to 170,000 mt and it is expected to be similar in 2020. Over 100,000 mt is used for crushing and the balance for edible consumption. Currently, the demand from the Crushing industry remains stable whereas the demand for the edible grade is quite slow.
Turkey: –
At present Turkey holds a stock of approximately 35,000 mt which is One Third of their total requirement. The country is very cautious regarding the Covid situation leading to decrease in local confectionary consumption leading to the fall in price. Turkey does not have a good holding capacity hence there is a pressure on Selling the cargo.
Conclusion: –
With regards to the aforementioned information, currently there are no bullish cues that may increase the price of the Sim-Sim in near term and it is expected to remain stable. However, if the Domestic crop damage in China exceeds 25-30% it might spike up the price. We await the news regarding the production figures from Sudan, Nigeria, Ethiopia for market to decide its further course.
Following are the indication price of Sesame Seeds as on 29th July 2020: –
- Tanzania Mix – USD 1050/- per mt
- Tanzana White – USD 1085/- per mt
- Mozambique – USD 1090/- per mt
- Sudan Reddish – USD 1025/- per mt
- Nigeria Mix – USD 1075/- per mt
- India Sortex – USD 1280/- per mt
- India 99/1/1 – USD 1180/- per mt