Sesame seeds: New Tender will have considerable impact

 Korean government is buying Sesame seeds by its Government Company i.e. “AT” Korea Agro-Fisheries & Food Trader Corporation. There is duty of 300% approximately on imports of Sesame Seed in Korea for the direct and private importers.

Total consumption of sesame seeds by Korea is about more than 115,000 Mt. approximately. The said quantity will be imported by Government by floating tenders for procurement of Sesame seeds from all over the world and also issuing private tenders to the importers who want to imports to Korea.

Whatever cargo imported by Government by way of Tenders, government sales imported cargo through their retail chains and also to oil factories that are processing oils from seeds.

Government also sales “the Quotas” for imports of sesame seeds to private players and after that private players imports by using that quotas certificate. For that quota is nothing but the duty paid in advance to the government and Govt. has issued the permission to import the said quantity.

Total Quantity :

The Quantity imported by tenders is approximately 37,500 to 40,000mt, depending on the decision taken in the meeting in the month of January/February every year.

Quantity imported by Private Quotas is approximately about 40,000 mt.

In addition, certain quantities have been imported to Korea by way of hand luggage from China to Korea (passenger allowances) approximately 8000 to 10000mt.

People imports Sesame Seeds Powder in South Korea of approximately 5,000 to 30,000mt as there is less duty for the Sesame Powder imports in South Korea.

Total quantity imported to South Korea is 115,000mt.

There are three to four tenders has been floated by government each time and making quantity as decided starting of the each year according to their sales plan and consumption patterns.

Current Tenders:

Korea tender notice has been floated today for 3000 mt. and 7000 mt.

Earlier Indian shippers were participating in this tender but since last 6 to 7 years East African countries like Ethiopia and Sudan also participate in the tender bidding. Earlier people were not aware fully for quality and time and terms of the shipment and bidding. Now shippers from East African countries are now well aware about the same and they do participate accordingly.

Since last two years West African countries which are producing sesame seeds now came in the bidding for the Korean tenders. Certain companies who are big and giant groups based in Europe they also started participating in the Bidding the tenders.

Tender 1:

In the above Tenders 3000mt. is the Premium Quality (P1) Grade is higher Grade.

Indian Cargo should reach before 2 June 2017

African Cargo should reach before 3 July 2017

 Tender 2:

In the above Tenders 3000mt. is the Premium Quality (P2) Regular Grade.

Indian Cargo should reach before 2 June 2017

African Cargo should reach before 3 July 2017

Transit time from India to South Korea is about 20 to 25 days maximum.

Transit time from Africa to Korea is more than 40 to 45 days.

 (The allowance of the delivery period different from India and African shippers is only because of the transit time for the cargo.)

Implication on prices:

India market:

Normally when Korea tenders news comes all exporters, traders and local traders stockiest sentiment changes and due to that local market price will be stable or it will go higher. Then after announcement of the result of the Tender depends on the prices awarded tenders the market will go up and down. The price also depends on the delivery time. If the delivery time is short then local prices will be up. If the delivery time is enough then prices will stable or it will not affect the prices in long run.

There will be new crop coming to market in the month of mid of May 2017. If bidder want to participate from that cargo, it will be difficult to make it possible to reach the cargo on time as per the time limit fixed up.

There may be chance that prices will go up for the time being as the shipper has to take cargo which is October/November crop 2016 (Winter Crop). So it means that there will be sudden demand in the month of April 2017 and due to that prices will go up in the local market due to Bidders demand to purchase from the local market.

East Africa Market:

There are two countries mainly Mozambique, Tanzania, Ethiopia and Sudan are participating in the tenders. Mozambique and Tanzania new crop will arrive in the month of May –June 2017. Only Ethiopia and Sudan will be biding these tenders. Sudan has good crop this year and also Ethiopia has good crop this year and prices are also competitive in their respective origins. Ethiopia and Sudan will participate in big way in these tenders.

Price will go higher little in Ethiopia and Sudan due to this tender news. But the prices and stock is controlled and traded by the Online Government Auction i.e. ECX (Ethiopian commodity Exchange). There is chance that prices will go higher in Ethiopia for time being and then according to market movements the prices will moves

West Africa Market:

Mainly Nigeria cargo is been participated in these tenders. But due to exchange rate fluctuation in Nigeria prices may not be competitive. And also the season is got over few people have stock, so who has stock on hand will participate in the tender and there may be change of award to the bidder of Nigeria cargo.

Due to this news the prices will be stable or will be strong for the time being due to this sudden demand and news. As other origin prices are moving the demand for Nigeria and West African countries will increase and due to that prices will go up or stable.

Conclusion:

Prices are expected to be stable or go up for the time being in the month of April 2017. After that it will depends on the demand from China as well as all over the world. If they can absorb these high prices then prices will go further higher.

I personally feel that prices will go up for the time being and then when crop will arrives from Mozambique and Tanzania and Indian summer crop, it will comes down after new crop arrival starts.