Blue Nile Research - Ethiopian Sesame Market 15-05-17

Blue Nile Trading
Ethiopian Commodity Market Research

Agriculture Trading Report from BNT Research

Monday, 15 May 2017 | View this email in your browser
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Market Viewpoint

Sesame Weekly: 15/05/17

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Ethiopian sesame prices are flat, moving in a tight c. 5% range in the last month
Humera and Wollega daily volatility has fallen to c. 1% moves per day
Sesame exports for MY 2016/17 have been c. 180k MT – almost 100k MT below previous years at same point in time

1. Sesame prices are stable with no clear trend

Both Humera and Wollega prices have remained stable in recent weeks – the most stable it has been all year (Section 2). However, prices have remained elevated even with poor trading volumes and export volumes (Section 3), so we feel there is still room for prices to fall in the short and medium term.

ECX sesame trading volumes have been consistent in recent months at c. 6,000 MT per week with Humera still dominant, comprising c. 60% of all sesame traded.

Exhibit 1: Sesame FOB break-even export prices

As of 12 May 2017, one-month date range

* did not trade in previous session
Source: Blue Nile Trading Ltd., Ethiopian Commodity Exchange

Exhibit 2: Six-month Humera FOB price trends

Source: Blue Nile Trading Ltd., Ethiopian Commodity Exchange

Exhibit 3: Six-month Wollega FOB price trends

Source: Blue Nile Trading Ltd., Ethiopian Commodity Exchange

2. Sesame daily volatility has fallen to the lowest this season

Ethiopian sesame is trading with the lowest daily volatility of the year. Daily volatility for Humera and Wollega has fallen to nearly 1% moves per day. Historically, daily volatility falls as the sesame season nears the end and picks up just before havest time in August and September.

Sesame supply is abundant (Section 3) which makes it a suitable time for sesame trading and execution.

Exhibit 4: Six-month daily realised sesame volitality

Source: Blue Nile Trading Ltd., Ethiopian Commodity Exchange

3. Ethiopian sesame export volumes have suffered hugely due to the slowdown in China

Ethiopian sesame exports this marketing year, 2016/17, have fallen short compared to previous years (Exhibit 5). Current export volumes from Oct16 to April17 (for first seven months of the season) have been c. 180k MT. Compared to the run-rate of the previous two seasons, this represents a shortfall of c. 100k MT – a huge volume.

As highlighted in previous reports, China is the dominant market force (Exhibit 6) in the Ethiopian sesame market and any slowdown in demand will have a large impact on export volumes for many countries.

Exhibit 5: Ethiopian sesame exports and weighted-average export prices in the last four marketing years

Source: Blue Nile Trading Ltd., ERCA

Exhibit 6: Top-10 Ethiopian sesame export destinations in MY16/17

From Oct16 to Apr17

Source: Blue Nile Trading Ltd., ERCA

Thank you for reading and if you have any views, comments or trading inquiries then please get in touch using my details below.

Intended for the clients of Blue Nile Trading Ltd.

General disclosures:

This research is for our clients only. Other than disclosures relating to Blue Nile Trading Limited, this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate, but various regulations may prevent us from doing so. Other than certain industry reports published on a periodic basis, the large majority of reports are published at irregular intervals as appropriate in the analyst’s judgment.