The Hindu Business Line : Defaults of sesamum export looming large

A SHARP price rise in the domestic market over the last three weeks is threatening to disrupt exports of sesameseed. In particular, shipments scheduled for October are in big trouble with defaults looking imminent.

Despite forecast of a bumper crop of oilseeds, in general, and sharp rebound in sesameseed output in particular, prices of the latter have shot up considerably since the beginning of October.

Gujarat origin sesamum white 99/1 grade that opened the season at Rs 24,000 per tonne is today quoted at Rs 34,000 per tonne.

Similarly, hulled sesamum rates have shot up to Rs 43,000 per tonne from Rs 31,000 a tonne.

Exporters have been caught short and are scrambling to cover the cargo. But with the market shooting up, they are facing the prospect of huge losses.

Many had committed for rates in the range of $600-$640 per tonne for white 99/1.These have now skyrocketed to the $700-$770-per-tonne level for fresh bookings.

China has reportedly made large purchases from India and is continuing to place orders.

However, following the unexpected price escalation, as much as 10,000 tonnes of Chinese purchases destined for Shanghai might end up as default, a trader said.

Some shipments to South Korea could also get into trouble, it is feared.

According to a trade intermediary, the local market is firming up artificially on exaggerated reports of Chinese purchases.

There is now apprehension that export defaults could cost the country dear in terms of reliability of supplies.

If Indian sellers do not fulfil their contractual obligation of shipment within the agreed time schedule, buyers can drag them to arbitration.

Most of the trade in sesameseed is done on the basis of standard terms of the Federation of Oils, Seeds and Fats Associations in London).

Only recently, the Union Ministry of Agriculture released the first estimate of kharif 2003 oilseeds crop and placed the overall crop size at 150 lakh tonnes, up from 87 lt of kharif 2002.

Of this, sesamum crop size was estimated at 680,000 tonnes against 420,000 tonnes of kharif 2002.

However, many are skeptical about the Government estimate and perceive it as a clear case of over-estimation.

Even during the drought year of 2002, the first estimate of the Government was 117 l.t. of oilseeds, which was revised down to 87 l.t. It should come as no surprise if it is repeated this year too.

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