POC 2018 PALM & LAURIC OILS PRICE OUTLOOK CONFERENCE & EXHIBITION. Emerging Trends In The Edible Oil Sector A View From Pakistan..

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1 POC 2018 PALM & LAURIC OILS PRICE OUTLOOK CONFERENCE & EXHIBITION 5-7 March, 2018 Hotel Shangri-La, Kuala Lumpur 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-Feb 2018 Product Jan-Feb 2018 Olien 1,305,586 1,301,212 1,544, ,546 RBDPO 1,077, ,122 1,162, ,443 CPO 125, , ,815 20,000 CDSBO 191, , ,150 Nil Total 2,699,408 2,570,130 3,050, ,989 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-FEB 2018 PRODUCT Jan-Feb 2018 Soybeans 579, ,935 1,907, ,361 Canola/Rapeseed 806,766 1,156,578 1,070, ,665 Sunflower 30, ,981 40,950 0 Total 1,416,976 2,213,494 3,019, ,026 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 January 2018 were 2.54 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. 5. 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.

13 MARKET FACTS 7. Abrupt increase in Indian Palm Oil Duty a shocking gift for POC 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. Time being Palm market is indeed very uncertain as though MDEX is very much stagnant, the local physical CPO prices are high which is giving negative margin to all the refiners. Malaysian Government indeed abolished the Export Tax on CPO for three months but unfortunately CPO prices are so high that destination business is very slow. This may not help Malaysia to lower down their stock levels significantly. Hence, I believe it will be good for Malaysia to extend export of CPO without export tax. While the Crude Oil prices are relatively strong, the European Union policy is indeed a great impediment to use Palm Oil in Bio-Fuel.

15 FORECAST Time being Soybean market will be a driving force which may perhaps pull the palm market upward particularly for next two month. Month of Ramadan is going to commence from Mid May 2018, hence, there should be reasonable buying from destination particularly from Islamic countries. 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. Based on the above market facts and I forecasted during Pakistan Edible Oil Conference (PEOC-2018) on 20 th January 2018, it is still my belief that MDEX may remain between RM 2400 to RM 2600 till April 18. For subsequent period it all depends how the production will catch up. However, physical prices are expected to remain steady to firm due to supply constraints and currency factors.

16 There are two kinds of people: Those who do the work And those who take the credit. Try to be in the first group There is less competition.

17 THANK YOU