W12 Sesame Update: Navigating Uncertainties Amid Global Challenges in 2024 and Indian Production Concern

Published 2024년 4월 2일

In W12 in the sesame seed landscape, the global sesame market in early 2024 is navigating challenges encompassing environmental pressures, currency fluctuations, and shifting production dynamics. A significant player in sesame production, Nigeria foresees a production output of 350 thousand mt for the ongoing season, while Burkina Faso, in conjunction with Mali, is expected to contribute 200 thousand mt. India's sesame sowing area has contracted 36% YoY due to water scarcity and environmental issues, reducing production and potential global supply and pricing implications. Despite indications of scarcity, subdued domestic and international demand has tempered price hikes, with stable stockpiles in China contributing to a balanced global supply. However, uncertainties persist, particularly regarding Indian sesame production, reflecting the interconnectedness of the global sesame market and the need for sustainable agricultural practices to ensure stability.

Global Sesame Market Grapples with Environmental Pressures, Currency Devaluation, and Shifting Supply Chains

The global sesame market in early 2024 (Jan-24 and Feb-24) is grappling with environmental challenges, currency fluctuations, and evolving production and trade patterns. Nigeria, a major producer, anticipates an output of 350 thousand metric tons (mt) for the current season. However, the significant devaluation of the Nigerian Naira (NGN) against the United States Dollar (USD) has increased cost pressures on exporters and influenced global prices. Burkina Faso's anticipated production,combined with Mali’s, is estimated at 200 thousand mt, highlighting their importance in early season market dynamics.
India's sesame sowing area has declined by 36% year-over-year (YoY), attributed to water scarcity and environmental concerns. This reduction has direct implications for global supply and pricing. Low market arrivals of a thousand bags per day in Gujarat , a key sesame-producing region, reinforce the scarcity. Prices for various sesame seed varieties across major Indian markets such as Mundra Port, Gwalior, Gujarat, and West Bengal, have decreased by 1.1% to 2.1% YoY.

Water scarcity and other climate challenges directly impacted sowing areas in India, particularly Gujarat, reducing production and potentially influencing market sentiment. Low market arrivals suggest limited supply, which could commonly lead to price increases. However, subdued domestic and international demand seems to neutralize potential price hikes. China's stable sesame stockpiles of 145 thousand mt at Qingdao port contribute to the global supply balance. Subdued import activity in major markets like Japan and South Korea suggests a cautious approach towards inventory and price negotiations.

Price fluctuations reflect market volatility due to Nigeria’s and Burkina Faso's market positioning and India's supply limitations. Reduced sowing in India due to water scarcity will likely tighten global supplies, impacting prices and trading strategies. Sustainable water management practices are critical to ensure the longevity and productivity of sesame cultivation, ultimately impacting global market dynamics.

Uncertainties Cloud Indian Sesame Production

The Indian sesame market faces a period of uncertainty. As a leading producer and exporter of sesame seeds, India faces concerns about future supply and impacting both domestic and global markets. Compared to 2023, the sesame sowing area has decreased substantially across all three major seasons (Kharif, Rabi, and Summer). Kharif sowing dropped by 7.68% YoY, Rabi sowing by approximately 41% YoY, and Summer sowing lags behind historical trends.

Adverse weather conditions, particularly in Tamil Nadu, have resulted in delayed Rabi sowing and crop losses, further exacerbating supply concerns. The average Kharif season yield fell to 238 kilograms (kg) per hectare (ha), leading to a projected total Kharif production of 170.4 thousand mt, down from 2023. Concerns about reduced production are driving up sesame prices. Projections for quality sesame suggest a potential range of USD 1.44/kg to USD 2.16/kg as the Rabi harvest begins in Apr-24.

Higher domestic prices have made Indian sesame less competitive in the global market compared to African producers like Sudan, Nigeria, Tanzania, and Mozambique.This has led to a shift in sourcing patterns by major importers like China. Rising prices are also impacting domestic sesame consumption in India.