PAKISTAN EDIBLE OIL CONFERENCE (PEOC)

Sunday, 7th February, 2016

Mvenpick Hotel, Karachi.

Emerging Trends In The Edible Oil Sector A View From Pakistan..
By

Abdul Rasheed Janmohammed

Chairman Pakistan Edible Oil Refiners Association (PEORA)
Chief Executive Pakistan Edible Oil Conference (PEOC)

PAKISTAN EDIBLE OIL SCENARIO

Per Capita Consumption

: 17 kgs.

Total Consumption

: Around 3.7 Million Tons.

Local Production

: 0.5-0.7 Million Tons.

Import of Edible Oils

: Around 2.6 Million Tons.

Oil Extracted from Imported Seeds

: Around 0.5 Million Tons.

Total Import Bill of Edible Oil about

: US$ 1.8 to 2.0 Billion.

Total Import Bill of Oilseeds about

: US$ 0.5 to 0.6 Billion.

The Duty Structure on Edible Oils is very heavy as per Table appended herein below:

Import of Edible Oils in Pakistan

(Basis Arrival) in M.Tons
For January-December 2013, 2014 And 2015
Product

2013

2014

2015

Olien

979,308

1,093,958

1,305,586

RBDPO

998,619

1,122,857

1,077,194

CPO

278,118

104,290

125,319

CDSBO

55,214

122,862

191,309

Total

2,311,259

2,443,967

2,699,408

There has been substantial increase in import of Edible Oils every year i.e.
5.74% in 2014 as compared to 2013 and 10.45 in 2015 as compared to
2014.

Import of Palm Oil Products

From Malaysia and Indonesia
During January-December 2013 in M.Tons (Basis Arrival)
Product

Malaysia

Indonesia

Total

Olien

864,332

88

114,976

12

979,308

RBDPO

225,374

23

773,245

77

998,619

CPO

224,128

81

53,900

19

278,118

1,313,834

942,211
2,256,045

Malaysia

58%

Indonesia

42%

Import of Palm Oil Products

From Malaysia and Indonesia
During January-December 2014 in M.Tons (Basis Arrival)
Product

Malaysia

Indonesia

Total

Olien

416,540

38

677,418

62

1,093,958

RBDPO

120,515

11

1,002,342

89

1,122,857

CPO

99,790

96

4,500

104,290

636,845

1,684,260
2,321,105

Malaysia

27.50%

Indonesia

72.50%

Import of Palm Oil Products

From Malaysia and Indonesia
During January-December 2015 in M.Tons (Basis Arrival)
Product

Malaysia

Indonesia

Total

Olien

241,961

19

1,063,625

91

1,305,586

RBDPO

99,184

09

978,010

81

1,077,194

CPO

96,894

77

28,425

23

125,319

438,039

2,070,060
2,508,099

Malaysia

17%

Indonesia

83%

Percentage Of Palm Oil Products

From Malaysia and Indonesia Imported
During Jan-Dec 2013, 2014 and 2015 In M.Tons (Basis Arrival)
Year

Malaysia %

Indonesia %

2013

58

42

2014

27.50

72.50

2015

17

83

90

83

80

72.5

70

60

58

50

40

Malaysia

42

30

Indonesia

27.5

20

17

10

2013

2014

2015

Oilseeds Duty Structure Pak. Rupees / M.Tons

Product

Import Duty

FED

Sales Tax

Advance
I.Tax

Canola/Rapeseed

2%

Rs. 400 PMT

16%

5.5%

Sunflower Seed

2%

Rs. 400 PMT

16%

5.5%

Soybean Seed

2%

Rs. 400 PMT

6%

5.5%

Production of Major Oilseeds Crop

2012-2013
Production
Oilseed
Oil

2013-2014
Production
Oilseed
Oil

(000 Tons)

2014-2015
Production
Oilseed
Oil

(000 Tons)

(000 Tons)

3324

4000

3592

431

3450

414

Rapeseed

216

66

189

60

181

58

Sunflower Seed

244

95

190

76

178

68

16

16

16

Cotton Seed

Canola Seed
Total
Source: Pakistan

567

573

Oil Seed
Development Board / Economic Survey of Pakistan.

546

Import of Oilseeds in Pakistan

(Basis Arrival) in M.Tons
For January-December 2013, 2014 and 2015
Product

2013

2014

2015

Rapeseed / Canola

534,384

982,870

806,766

Sunflower

185,985

193,186

30,486

Soybean Seed

9,094

579,724

Total

729,369

1,185,150

1,416,976

There has been substantial increase in import of Oilseeds into Pakistan every year i.e. 62.4%
in 2014 as compared to 2013 and 19.56 in 2015 as compared to 2014.

New trend is being created in Pakistan of importing Soybeans on

Premium over CBOT basis. 2015 has been the first year that Pakistan
have embarked very aggressively on the journey of importing
Soybeans due to very weak Global prices and duty advantage over
other Oilseeds. I must admit that Pakistan entrepreneurs have done a
very innovative work by importing Soybeans only on premium over
CBOT. This has given them a great flexibility of booking physical
prices as and when required which is very much suitable in the bearish
market.
The above statistics will prove that Pakistan buyers covered reasonable
quantity of Soybeans in the year 2015 and have also covered the
requirement for the first half of 2016. This shift of buying Soybeans
will ultimately reduce the import of other Oilseeds like Canola,
Rapeseed and Sunflower Seed.

MARKET FACTS

Let us see where the Market could head on the basis of following facts:
1.

Malaysian Palm Production was 19.6 (M) tons in 2014 against 19.9 (M) tons in 2015
and expected to be 20.2 (M) tons in 2016.

2.

Indonesian Palm Production was around 31.0(M) tons in 2014 against around 33.0 (M)
tons in 2015 and expected to be around 34.0 (M) tons in 2016. (Indonesian figures
could have some variance).

3.

US Soyabean Crop was around 106.9 (M) Tons in 2014 against 107.0 (M) Tons in 2015
and expected to be around 105.5 (M) in 2016.

4.

Argentina Soyabean Crop was around 53.0 (M) Tons in 2014 against 60.2 (M) Tons
2015 and expected to be around 57.7 (M) Tons in 2016.

5.

Brazilian Soyabean Crop was 86.0 (M) Tons in 2014 against 96.0 (M) Tons 2015 and
expected to be around 99.5 (M) Tons in 2016.

6.

Malaysian Stocks of Palm Oil in December 2015 were 2.63 (M) Tons .

7.

Indian import was 14.6 million tonnes of edible oil during 2014-15 and expected to be
around 15.7 (M) Tons in 2015-16.

8.

The year 2015 has been very vulnerable year for Edible Oils. With due respect, all forecasts did
not prove right as perhaps everyone under estimated the supplies. The highest we have seen on
MDEX was RM 2508 on 31st Dec 2015 and the lowest we have seen was RM 1863 on 25th
August 2015 i.e. the variation of 34.62% during 2015. All the Bulls were expecting El Nio to
come but perhaps it did not materialized and so far the Bears win the race.

9.

Fundamentally all commodity markets remained very weak due to extremely low prices of Crude
Oil and weak Chinese economy. Crude Oil which is mostly termed as the Political Commodity
have been the worst performer. Since the Crude Oil market is the driving force for all other
commodities, the bearish trend is following the Crude Oil. China being one of the largest
economy is passing through a very gloomy period and is affecting the markets all over the World.

10. Another area which has been very disturbing force is the depreciation of currencies in most of the
Countries. Time being it is extremely difficult for the Industry players to plan out their
requirements due to severe Global crises in commodities as well as in currencies.
11. Huge crop all over the World of Edible Oils and Oilseeds always push the sellers to chase buyers
which results in the glut of oils at the destinations.
12.

Since production is multiplying in Indonesia, this origin will not only remain very competitive
but will be an aggressive seller in terms of quantity particularly for Refined Palm Oil. Pakistan is
perhaps the safe home for Indonesian Refined Palm Oil and this is the reason that prices of RBD
Palm Oil remain much lower as compared to Olien for Indonesian origin. This will put additional
pressure on the prices of PFAD as well being by-product of RBD Palm Oil.

FORECAST
Unlike a few years back, the market in 2016 will have to deal with a host of new issues that is shaping up:
First, the steeply below normal rate of world palm oil production growth and hence a lot more emphasis
will be on soybean crushing to satisfy oil demand. This is the single most bullish supply factor for the time
bieng. But here comes the second issue Chinese economy slow down and commodities in general are
taking a beating. Another related factor is prolonged decline in crude mineral oil, which is again a drag to
biodiesel production and demand. USD on course for further strengthening is also negative to commodities
price including oils & fats.
So, we think the delayed effect of dry weather last year on production and supply especially in palm will
see prices to stay firm mainly in the 1Q 2016. Further down the road, as weather is widely expected to
improve, production will return to normal in 2H and the demand will be key. Month of Ramadan will be
in Early June 2016 which will pull the demand.
Overall price threshold for palm should be lifted from a year ago will have range of RM 2300-2600 for
BMD.
Other factors to watch will be the biodiesel programme in both Malaysia (B10) & Indonesia (B20) and the
progress. Also, the spread between SBO-Palm should still be monitored, with the former still having high
carryover from previous seasons.

I would like to conclude my Presentation with