Palm oil imports in Pakistan rose 18 percent to 1.17 million tons in the first five months of the 2015/16 fiscal year as the commodity’s high international prices couldn’t suppress its consumption growth locally, analysts said on Monday.
The Pakistan Bureau of Statistics (PBS) data showed that palm oil imports stood at 991,213 tons in the same period a year ago.
In dollar terms, however, palm oil imports dropped 9.65 percent to $720,383 in July-November FY16 over the corresponding period a year earlier.
A leading palm oil importer said higher prices are unlikely to curb consumption growth, but they will make edible oil imports more costly.
The importer said high price volatility, during the last two years, in the range of $200/ton has shattered the importers’ confidence.
“We are losing money on each import and not in a position to buy more and make more margins amidst upward revision in the international prices,” he said.
Currently, the RBT palm oil trades at around $520/ton. Palm oil futures for February contracts stand at $550/ton.
In 2015, the palm olein prices quoted at $470 to $670/ton against $625-870/ton in the preceding year.
Pakistan’s palm imports declined to $1.8 billion in FY15 from $1.9 billion in the preceding year, mainly on account of softening palm oil prices at the international commodities market.
Analysts said Pakistan’s palm oil imports will be steady during the current fiscal year due to stagnant demand from the food industry and availability of an alternative.
A head of a Singapore-based company, producing edible oil, said any increase in the prices of palm oil will have a minimal impact on the import volume in Pakistan, which is one of the world’s largest buyers of Malaysian and Indonesian palm oil.
“The demand in Pakistan for palm oil is likely to remain around 2.5 million tons this year, the same as in the last fiscal year,” he said, on condition of anonymity.
El Nino has effected palm production, while demand will bring the stocks in Malaysia and Indonesia down to record low.
“The situation looks to be severe in the next three months, thus will bring international prices high to beat last three years’ record,” said an importer.
“The prices of palm olein, a liquid form of palm oil used in cooking and baking, are expected to increase by $100 a ton over the next 90 days and will get stabilise at these levels for the next few months.”
Shaikh Amjad Rasheed, ex-chairman of Pakistan Vanaspati Manufacturers Association (PVMA) said palm oil prices could remain flat for the next three months, but are likely to be reduced by $50/ton after April this year.
Many traders foresee brighter prospects of increasing soybean and oil into Pakistan in the backdrop of expected rise in the prices.
Moreover, the declining size and yield in cotton crop in the country will also boost soya seed and oil.
“Pakistan last year has imported about 200,000 ton of soybean oils due to its lower prices and shorter cotton seed oil crop,” said another importer.
“Good news is that the production of soybean is expected to achieve a record high in South America.”
Soybean imports saw a steep rise of 140 percent in value during July-November FY15. It amounted to $85,525 against $35,598 a year earlier. Soybean imports surged to 95,384 tons compared with $36,506 tons in July-November FY14.
Pakistan has an annual consumption of edible oil at four million tons with an average growth at about four percent. Palm accounts for 65 percent share in total edible oil consumption. The current palm stocks in the country are around 260,000 tons.
Cotton seed oil is the main locally produced oil crop, which adds around 400,000 tons of oil to the demand, while sunflower and rapeseeds crops are smaller with average oil production at 300-400,000 tons.
Pakistan duty tariff on soya oil is higher over palm olein by $13/ton. Further, due to longer voyage the freight is higher by $10-15/ton.
The benchmark prices of the palm oil tumbled almost 60 percent during the last five years from $1,250 a ton in 2010 to $520/ton in 2015. This is mainly because of rising supply of rival oilseeds, weak uptake in the bio-fuel sector and a rout in crude oil prices.
Over the last few years palm production has increased faster than the demand. The increase in production is attributed to expansion in plantation area in Indonesia and use of high yielding varieties of plants.
(Source – http://www.blackseagrain.net/novosti/pakistan-palm-oil-imports-rise-to-1-17-million-tons-in-july-nov)