September 2016
MARKET TREND
SESAME
China crop is being harvested now and is expected to be smaller than last year. They had lots of rains and a lost quite a big volume to the rains and the sowing was less as compared to previous years in line with the trend of last few years. Logically speaking that should spur the market there or at least create a ripple but nothing moved.
China is in a different league all together now, they are importing close to 1 million MT of sesame seeds from various global suppliers and for them the local crop really doesn't matter much as long there is another destination which can cover that void. The trade to china has become so accessible and with so many big players the local crop has taken an absolute back seat in their scheme of things.
The port stocks in China are rumored to be at an all time high, some estimate it to be close to 200,000 MT which is like a 3 month consumption buffer stock. Over this their new crop and the incoming imports have really slowed down the trade in China. Africa, sowing currently on in various countries and Nigerian crop is ready for harvest.
It rumored to be a good crop, last year around the same time we heard of rumours of some damage to the African crops but nothing much really happened and they had a good harvest. I believe many African countries are keeping a close watch on the situation in China and India and with both rumored to have bad crops the area under sesame cultivation can increase.
SESAME
Past experience shows us how quickly the African nations can add areas to a particular crop, there has been almost a 200- 250% growth in sesame volumes in the past decade, that’s almost an average growth rate of 20% annually with potential to add more if needed thanks to all the surplus uncultivated virgin landmass they have.
Sesame also serves as a cash crop for the Africans with huge volumes moving quickly, which means more $'s to the nations where the trade is not anymore about commodity but more about who has the $'s in hand for Imports.
As on date apart from flooding in some parts of Sudan no bad news from any African sowing area. Sudan non the less is sitting on huge stocks from last season and would be happy to sell it out at discounted prices due to steep currency fluctuation there and with new crop just months away it makes perfect sense as well.
India, just like last year the Met department warned well in advance of a good monsoon this year, Sesame of course is not a water friendly crop so we saw a lot of crop shift during sowing at the start of the season. We had estimated that last year at least 10 - 15% extra area was covered under sesame plantation apart from the official government sowing area numbers, that swing number is definitely out of calculations this year. Apart from that officially the sowing is less by about 15% as per government data.
So at first calculations we can discount that this year's crop will be less by at least 30% compared to last year. Now coming to the damage caused by heavy rains in the remaining crop. The trade estimates coming from various people involved put the numbers between 30 - 40%.
TURMERIC
Turmeric on NCDEX settled down by -1.27% at 6824 as the acreage of turmeric during current year is higher compared to the last two years due to normal monsoon rains in major growing states of Tamil Nadu, Telangana and Maharashtra. Though, some losses were capped on strong export demand. According to the recent report from Andhra Pradesh Agriculture Department, area under turmeric in the state stood higher at 13,992 hectares as on Sep 9 as against 13,031 hectares same period a year ago. In Telangana the area under turmeric was up at 45,633 hectares as compared to 40,630 hectares a year ago period. Sowing has also increased in other producing states such as Maharashtra, Odisha and Karnataka. Next year’s crop may be bumper due to favorable weather conditions in all the producing centers.
Turmeric production for the current crop year (2015 - 2016) is estimated to be around 315,000 tons compared to the previous year production of 324,000 tons. At Warangal market arrivals were reported at 250 bags, down by 150 bags from previous trading day. The dispatch of turmeric to North India has been affected by Karnataka issue and the stocks of turmeric are piling up with traders and farmers. Around 1,500 bags arrived for sale and 65 per cent stocks were sold.
TURMERIC
In the Gobichettipalayam Agricultural Cooperative Marketing Society, only nine bags arrived and all the bags were sold for decreased price. In Nizamabad, a major spot market in AP, the price ended at 7409.7 rupees gained 7.1 rupees. Technically market is under fresh selling as market has witnessed gain in open interest by 4.48% to settled at 15380, now Turmeric is getting support at 6742 and below same could see a test of 6662 level, and resistance is now likely to be seen at 6934, a move above could see prices testing 7046.
GARLIC
Each year the manufacturable period of new crop dehydrated garlic is from the end of June to the beginning of Sept. So it almost finished now.
As far as we know there is only around 30000MT dehydrated garlic materials (usually I refer it as "whole materials" used to produce garlic granules and powder). However the same time in previous years there were about 70000 - 80000MT. So it will not cover the demand.
Price will be increasing further. Now it is even very difficult to buy raw materials in China
PALM OIL
Palm oil price rises to 5 month high due to the global shortage. Palm oil production has been negatively affected by the severe drought caused by El Nino in 2015. El Nino faded towards the end of April and rainfall has improved since May 2016, but the lagged effects of the drought palm oil yields are still ongoing. Malaysia’s palm oil stocks stood near a six-year low at 1.46 million tonnes in August this year while Indonesia stocks were at 1.7 million tonnes in July. Back in 1982- 1983 and 1997 - 1998, Malaysia posted the largest drop in CPO production during the strong El Nino dry weather events.
Any rainfall deficit of 100 mm per year can translate into a reduction of between 10% and 20% in fresh fruit bunches (FFB) yields in the estates, say experts.
In Malaysia, the average rainfall varies between 1,600 mm and 2,400 mm per year. The supply disruption by El Nino also saw CPO prices in 2009 - 2010 swinging into comfortable levels between RM2,500 and RM3,000 per tonne. However, while global palm oil output for 2015 - 2016 is seen declining by significantly more than the previous forecast of 2.5 million tonnes, a strong recovery next year should offset the deficit.
Overall in oil year 2015-2016, palm oil production will decline by over six million tonnes, a decline which has never before been seen in history, but production in the next calendar year could see a strong recovery of almost 6.5 million tonnes.
PEPPER
The Pepper price has seen a decreasing trend more or less throughout the month with the prevalent price volatility in the Pepper producing country.
Vietnam pepper export to ASEAN and other countries 2016 ·Philippine: imported from Vietnam about 1,730 tons/year (2014, 2015) but only 6 month of 2016, they increase 3 times with 5,154 tons. Iran: imported from Vietnam about 229 tons in 2014, 435 tons in 2015 and a half of 2016, the quantity have reached 1,025 tons, increase 4.5 times compare to 2014 China: although producing with large quantity but hug domestic demand so China has to import pepper from Vietnam, about 2,000 tons/year (2014 & 2015), half of 2016 reach 5,855 tons, increase 3 times. Thailand: reach 300tons within 6 months 2016, average quantity imported from Vietnam 2014 & 2015: 1,650 tons. UAE: reached 2,232 tons within 7 months 2016, all year 2015 reached 1,894 tons.
Pepper supplier’s market:
Indian: the price still remained high, local price of Malabar black was recorded at the level of INR 697 (US$ 10.5) per Kg and US$ 10,680 per Mt FOB. Indonesia: although production decreased this year, pepper price in Lampung and Bangka were reported decreased during the week. A marginal decrease was also recorded for domestic white pepper in Sarawak. Sri Lanka: the price was reported to have increased marginally by 1% this week. Vietnam: the market still quiet with low price, no many buyers place order because they still wait for lower price expected
CHILLY ďƒ’
Red Chilly prices ruled steady at the benchmark markets of India after witnessing losses on previous session due to limited inquiry and reluctant sellers at the lower level. Red Chilly arrivals at Guntur market today reported around 80000 bags as against 70000 bags yesterday.
ďƒ’
Sellers are reluctant to sell their Red Chilly produce at the lower level as they anticipate some revival in demand ahead of festival. Red Chilly sowing in Andhra Pradesh as on September 21 stood at 121,000 hectares, against 98,000 hectares a year ago, while in Telangana Chilly cultivation reached at 58,000 hectares from 36,000 hectares previous year.
MILK
Skim milk powder prices in Europe increased at each end of the price range. There is a declining supply available to buyers following shrinking milk supplies and SMP production. Manufacturers are increasingly cautious about sales terms due to uncertainty as to what production volumes will be possible moving forward.
EU SMP exports January - June 2016 decreased 13.7% from the same period of 2015 according to Eucolait. The top three export destinations and percentage of total exports are: + +
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Algeria, 14.6%; China, 8.4%; Egypt, 8.3%.
Whey prices in Europe slightly firmed at each end of the price range, continuing recent price strength. There is buying interest for feed as well as for food grade whey. Feed grade interest is primarily within the EU while food grade also has some export market activity.
EU whey exports January - June 2016 increased 2.3% from the same period of 2015 according to Eucolait. The top three export destinations and percentage of total exports are: + + +
China, 29.1%; Indonesia, 15.1%; Malaysia, 9.7%.
MILK
Prices for whole milk powder in Western Europe firmed at each end of the price range. There is good buying from the European food industry, which is supporting price strength. Contracts for first quarter 2017 are being developed. Export interest is also helping to support prices. Some buyers are shopping around in hopes of finding slightly better price offers than initial quotes from some manufacturers.
EU WMP exports January - June 2016 increased 2.7% from the same period of 2015 according to Eucolait. The top three export destinations and percentage of total exports are:
Oman, 16.0%; Algeria, 6.5%; Cuba, 4.7%.
TURKIS HERBS
Laurel: crop is starting all areas in full swing - prices have been steady. no rush in buying believe daily trade will take place. we do not expect sharp up-down trend.
Oregano: same as laurel, hand to mouth buying of raw material. It was usd/t 60- 80 lower 3 - 4 weeks back but after some buying picked back up.
Turkish currency exchange has been playing major factor. For x: after moodys credit note downgrade Turkish lira depreciated by 1.5%.
PAPRIKA
The 2016 new crop is very good quality, high asta color, low toxins. But the size of Paprika is smaller than last year. The paprika new crop is very big quantity.
Delivery date: only little Paprika get dried now and the big quantity of Paprika will get dried in Middle Oct. So the delivery date is around Oct. 20, 2016.
Price: It is hard to say. One side, the paprika land/paprika quantity is much bigger than last year.
One side, the Oleoresin factories are starting the purchasing of Paprika now. Their purchase price is USD300-500/ton higher than last year. They will use 60 - 70% of the whole paprika quantity. So they had risen up the market price.