Oilseeds

Indian sesame seeds: "The future of the sesame seed market is unpredictable"

January 5, 2022 2:00 PM, Der AUDITOR
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SEEHEIM/GUJARAT. The AUDITOR's editorial team spoke to a number of different commodity trading experts. For today's interview, Meghna Thakkar, sesame seed and spices expert at Mark Overseas, Gujarat/India, answered our questions. She reports on the adversities and hurdles faced by the Indian sesame seed and spice market this year, but also about her positive experiences and her expectations for the coming year 2022.

What issues were the most difficult ones for the Indian sesame seeds and spices market to face in 2021? Were they mainly related to the lingering threat of the worldwide pandemic or do you think they would also have occurred in a more normal year?

The major difficulties and issues in 2021 were
- Labour shortage
- Panic in the market because of less supply due to restrictions, leading to an increase in prices
- Lockdowns
- Transportation
- High freight rates, almost 5 times as high as usual, and less availability of containers 
- ETO related problems, especially with sesame seeds for the EU markets.

We do not think that these problems would have occurred in normal years. According to the experts and different sources, the main reason was the pandemic.

In most markets, prices for feed and food commodities went up significantly over the course of the past year. Sesame seeds are no exception to that. Do you think buyers will have to adjust to these higher levels in the long run or do you expect prices to decrease again?

The future of the sesame seed market is still unpredictable, especially for 2022. Because of the heavy rainfalls, farmers fear crop damage in Rajasthan, Madhya Pradesh and Uttar Pradesh. The supply of the new crop and the demand situation after the buyers fulfilled their need for sesame seeds for the EU and Korea will determine the price of 2022. There is no drop in consumption in China. As Japan reduced its import this year and they do not have much stock for 2021, they will be importing sesame seeds for 2022. The world getting out of COVID-19 restrictions and the consumption of the products improving over time will have a positive impact on the price. India might experience a bit of a bearish trend as there are still high sesame seed stocks of about 210,000 mt stored in Chinese ports. The occurrence of the new Covid-19 variant can put a cap on demand. Pakistan already has excess production, and the country is closer to China than India. This might also be one of the reasons that won't let the market go so high. Another factor that can prove decisive for India's sesame seed price is the shrinking market for processed sesame seeds after the ETO incident. Despite these possible unfavourable factors that can negatively impact the prices of sesame seeds in India, experts believe the product will continue to have a bullish trend in the future.

Did the demand situation change compared to 2020 and 2019?

Traders and experts believe that demand will continue to be stable. Demand has been good and strong.  

Do you think some buyers and processors had to readjust their needs?

Yes of course, due to the difficulties mentioned above they had to adjust their supply and needs but overall it was manageable and things are getting better and more stable now.

Logistical issues like high freight costs, a lack of containers and truck drivers as well as closed ports were problems faced by the food and feed commodity market. Is there a lesson to be learned from that going into 2022?

Yes, it was a big lesson not just for the commodity market but for all industries. Many countries are facing fuel and electricity hikes, price hikes for almost all products and many industries are having difficult times. Covid has completely changed the worldwide scenario, showing us that anything can happen and we should be prepared for the worst scenario.

Additionally, climate change and crop concerns are real and pose a threat to all kinds of food and feed commodities around the world and will most likely continue to do so. How would this affect the Indian sesame seed and spice market in the future and what could companies in this industry do to improve this situation?

In India, there is a shortage of good quality sesame seed crops this year and about 40% of them are defective. It's too early to talk about spice markets as new crops will arrive in February/March. Commodities are dependent on weather, mainly on rains and other climate issues which are not in our hands. Therefore, at the time of sowing, only main precautions are taken by farmers. Once the crop has been sown and harvested we just can hope for favourable weather conditions. The whole scenario depends on the demand and supply situation and the quality of the product. Producers try their best to fulfil their customers’ requirements.

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