W10 Sesame Update: Global Sesame Market Faces Uncertainties, South Korea Navigates Sesame Reliance Through Imports and Tariffs

Published 2024년 3월 15일

In W10 in the sesame seed landscape, the global market exhibits diverse dynamics across key regions, with significant stock variations and currency fluctuations influencing price trends. In China, sesame seed stockpiles at Qingdao port remain high at 145 thousand mt, while Pakistani sesame stocks show signs of stagnation. Nigeria anticipates a sizable sesame crop of 320-350 thousand mt, yet faces challenges due to currency depreciation. International prices vary, with Togo White sesame offered at USD 1,800/mt and Humera sesame at USD 1,890/mt. South Korea, a significant sesame consumer, relies heavily on imports from China and India, with tariffs imposed to protect domestic production. WTO’s tariff rate quota scheme and utilization of roasted sesame seed powder from Southeast Asia provide avenues for importation. The sesame oil market in South Korea involves both large conglomerates and small-scale manufacturers, fostering a competitive market landscape.

Mixed Signals in the Global Sesame Market: Stockpiles, Currency Shifts, and Varied Demand

As of W10, the global sesame market was characterized by a mix of price trends, stock level variations, and currency fluctuations across key producing and consuming regions. As of March 4, 2024, Qingdao port in China holds a significant sesame seed stockpile of 145 thousand metric tons (mt). However, the level of Pakistani sesame seeds at the port has stagnated at around 20 thousand mt since the New Year, suggesting a slowdown in outflow. Market demand and export volumes from this key port will be crucial factors influencing future pricing and stock levels.

The anticipated sesame seed crop size in Nigeria for the current season is estimated to range between 320 to 350 thousand mt, with exports reaching an estimated 250 to 260 thousand mt so far. However, a significant depreciation of the Nigerian Naira (NGN) against the USD between Mar-23 and Feb-24 presents a challenge for Nigerian producers.

International sesame prices exhibit variations, with Togo White sesame offered around USD 1,800/mt and Humera sesame at USD 1,890/mt. Sellers are demonstrating some flexibility with potential discounts. Notably, demand for Tanzanian varieties has decreased in oil-crushing factories. Indian producers are currently navigating their sowing season amidst concerns about market quality. China and Nigeria are grappling with varying stock levels and the impact of currency fluctuations.

Sesame Seed Imports Fuel Korean Sesame Oil Production

Sesame seeds play a significant role in the South Korean food industry, with an estimated annual consumption of 70 thousand mt in the 2022/23 Marketing Year (MY), with a five-year average of 81 thousand mt. Of this volume, 25% is directly used for food applications, while the remaining 75% is used for sesame oil production. This demand is met primarily through imports, with domestic production contributing only around 10 thousand mt annually.

China and India are the leading suppliers of sesame seeds to South Korea, collectively accounting for 60% of imports. In contrast, sesame oil imports come primarily from China and Vietnam, with Mexico also playing a notable role. The Korean government imposes high tariffs on both sesame seeds and oil to protect domestic production. However, the World Trade Organization's (WTO) tariff rate quota (TRQ) scheme allows for a limited quantity of imports (58 thousand mt seeds and 668 mt oil) at a lower tariff rate of 40%. To circumvent high seed import tariffs, major manufacturers have begun utilizing imported roasted sesame seed powder from Southeast Asian countries, which benefit from a 0% tariff under the Korea-Association of Southeast Asian Nations (ASEAN) Free Trade Agreement (FTA). Estimates suggest this practice accounts for approximately 30 thousand mt of sesame oil production.

While the TRQ system provides some access to imported seeds and oil, domestic processors are also allocated a portion of their annual demand through weekly auctions. Companies can further supplement their needs by acquiring import licenses. Unlike major vegetable oils, the sesame and perilla seed oil business in Korea involves not only large food conglomerates but also numerous small-scale manufacturers, contributing to a diverse and competitive market landscape.