GLOBOIL INTERNATIONAL Emerging Trends In The Edible Oil Sector A View From Pakistan.. Abdul Rasheed Janmohammed

Transcription

1 GLOBOIL INTERNATIONAL April, 2018 Hotel JW Marriott Marquis, Dubai, U.A.E. Emerging Trends In The Edible Oil Sector A View From Pakistan.. By Abdul Rasheed Janmohammed Chief Executive Chief Executive Pakistan Edible Oil Conference (PEOC) Westbury Group Pakistan.

2 EDIBLE OIL SCENARIO 2017 Per Capita Consumption Total Consumption Local Production Import of Edible Oils Import of Oilseeds Oil Extracted from Imported Seeds Around 18 kgs. Around 4.20 Million Tons Around 0.40 Million Tons Around 3.0 Million Tons Around 3.0 Million Tons Around 0.80 Million Tons

3 EDIBLE OIL DUTY STRUCTURE PAK RUPEES / M.TON Product Import Duty (Malaysia) Import Duty (Indonesia) Additional Import Duty CED I.Tax FED Olien % 16% 5.5% 1000 RBDPO % 16% 5.5% 1000 CPO % 16% 5.5% 1000 Product Import Duty Additional Import Duty CED I.Tax FED CDSBO % 16% 5.5% 1000

4 IMPORT OF EDIBLE OILS IN PAKISTAN (BASIS ARRIVAL) IN M.TONS FOR JANUARY-DECEMBER 2015, 2016, 2017 & Jan-Mar 2018 Product Jan-Mar 2018 Olien 1,305,586 1,301,212 1,544, ,118 RBDPO 1,077, ,122 1,162, ,664 CPO 125, , ,815 29,999 CDSBO 191, , ,150 Nil Total 2,699,408 2,570,130 3,050, ,781 The import in the year 2017 was perhaps the highest so far and it was 18.69% higher than the year This could attribute to the increase in demand but to me Pakistan overbought which resulted in too much pressure in the local market.

5 IMPORT OF PALM OIL PRODUCTS FROM MALAYSIA AND INDONESIA DURING JANUARY-DECEMBER 2017 IN M.TONS (BASIS ARRIVAL) Product Malaysia % Indonesia % Total Olien 324, ,309, ,634,536 RBDPO 131, , ,073,142 CPO 121, ,815 Malaysia 20% Indonesia 80% 577,624 2,251,869 2,829,493

6 PERCENTAGE OF PALM OIL PRODUCTS FROM MALAYSIA AND INDONESIA IMPORTED DURING JANUARY-DECEMBER 2015, 2016, 2017 IN M.TONS (BASIS ARRIVAL) Year Malaysia % Indonesia % Traditionally, Pakistan has been a very important market for Malaysian Palm Oil. Commendable role played by MPOC 7 MPOB in promoting Malaysian Plam Oil to Pakistan. Indonesian Palm Oil Competitive Price, High Production and attractive Export Tariff. Malaysia Export Tax Policy.

7 GRAPH PERCENTAGE OF PALM OIL PRODUCTS FROM MALAYSIA AND INDONESIA IMPORTED DURING JANUARY-DECEMBER , 2017 IN M.TONS (BASIS ARRIVAL) Malaysia % Indonesia %

8 OILSEEDS DUTY STRUCTURE PAK RUPEES / M.TON Product Import Duty Federal Excise Duty Sales Tax Advance I.Tax Canola / Rapeseed 4% Rs. 400 PMT 16% 5.5% Sunflower Seed 4% Rs. 400 PMT 16% 5.5% Soybean Seed 4% Rs. 400 PMT 06% 5.5%

9 PRODUCTION OF MAJOR OILSEEDS CROP Production Production Oilseed Oil Oilseed Oil (000 Tons) (000 Tons) Cotton Seed Rapeseed Sunflower Seed Canola Seed Total Source: Pakistan Oilseed Development Board Economic Survey of Pakistan

10 IMPORT OF OILSEEDS IN PAKISTAN BASIS ARRIVAL IN M. TONS FOR THE PERIOD JAN-DEC 2015, 2016, 2017 & JAN-MAR 2018 PRODUCT Jan-Mar 2018 Soybeans 579, ,935 1,907, ,364 Canola/Rapeseed 806,766 1,156,578 1,070, ,825 Sunflower 30, ,981 40,950 0 Total 1,416,976 2,213,494 3,019, ,189 Increase of about 36.41% in Imports during 2017 as compared to Imports of Soybeans have increased substantially in the year 2017 i.e. by almost 100% over Imports of Sunflower Seed has declined due to very weak Sunflower Meal Market. Increase in the import of Soybeans is indeed unprecedented primarily due to less import of Soy Meal because of high tariff. However, to me it was over import which not only created pressure in the local markets but also huge logistical challenges.

11 MARKET FACTS Let us see where the Market could head on the basis of the following facts: Description 2016 (Million Tons) 2017 (Million Tons) Expected in 2018 (Million Tons) Malaysian Palm Production Indonesian Palm Production U. S. Soybean Crop Argentina Soybean Crop Brazil Soybean Crop Indian Imports of Edible Oils

12 MARKET FACTS 1. Malaysian Stocks of Palm Oil in March 2018 were 2.32 million tons. 2. MDEX 2017 : High RM 3175 on 18 th January and Low RM 2417 on 22 nd December i.e. swing of 31.36%. 3. In the year 2017, production analysis remained very much inconsistent as most of the year Industry players were expecting low production but ultimately the production turned out to be higher than the Industry expectation. 4. Abolition of Export Tax on CPO by Malaysia which is presently at Zero % and will be 5% from 1 st May Currencies again played a very significant role in Strong Malaysian RM and CAD kept the commodity prices in check. 6. Palm Oil SND shows large stocks. Large Global Palm Oil supplies cause price pressure on Global Veg markets thus slowing down of destination business in the last quarter of 2017/first quarter

13 MARKET FACTS 7. Abrupt increase in Indian Palm Oil Duty. 8. Argentinean drought dominating Global Oilseed headlines a drastic drop of 20% in production estimates. 9. Heavy rainfall in Brazil estimated record crop level of 115 mmt. 10. US Soybean exports suffer from heavy Brazilian competition. US Soybean stocks are likely to reach record levels. Until the new crop harvest in the US in September, Brazil will be the main origin for Soybean exports. China is expected to import 98.0 mmt in 2018 (94.0 mmt in 2017) and is expected to import more than mmt in Meal, the driving force of today s market.

14 When everything is clear.nothing is clear. FORECAST The market facts being deliberated upon, do give us certain directions. Palm Market is moving on a sideways trend with tight range of RM 20 fluctuation on daily basis. Time being market is not giving much direction as though fundamentally Palm market should have been better in the first quarter 2018 but due to political uncertainty and trade war between USA and China is perhaps not helping anyone. Ringgit is stuck in the range of vs USD. Exports are expected to slow down in view of CPO export duty which will be 5% from 1 st May Ramadan coverage has already been done and now destination business is hand to mouth in view of anticipated increase in the production from May onwards.

15 FORECAST Time being Soybean market will be a driving force which may perhaps pull the palm market upward particularly for next two month. Indian duty increase was indeed very surprising and they have perhaps taken a very brave decision to increase duty significantly. This is going to be a bearish news for Palm and friendly news for Soy Oil and other Soft Oils as so far Indian Government have not increased duty on Soy Oil. During PEOC Conference in January 2018 in Karachi and POC in March 2018 in Kuala Lumpur, I maintained my Palm Oil forecast of RM 2400 RM While market very well supported and did not go below RM 2400, it did not reach the peak level of anticipated RM Even now I feel that Market may range between RM RM 2600 levels during May/June as Palm is the cheapest oil at the moment. If the production increases during summer months, my forecast would be between RM RM 2500 during July-October 2018.

16 PETER F. DUCKER

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18 THANK YOU