GLOBOIL INTERNATIONAL 2018 27-29 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.
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
EDIBLE OIL DUTY STRUCTURE PAK RUPEES / M.TON Product Import Duty (Malaysia) Import Duty (Indonesia) Additional Import Duty CED I.Tax FED Olien 7742.50 7742.50 2% 16% 5.5% 1000 RBDPO 9230 9230 2% 16% 5.5% 1000 CPO 6850 6850 2% 16% 5.5% 1000 Product Import Duty Additional Import Duty CED I.Tax FED CDSBO 12000 2% 16% 5.5% 1000
IMPORT OF EDIBLE OILS IN PAKISTAN (BASIS ARRIVAL) IN M.TONS FOR JANUARY-DECEMBER 2015, 2016, 2017 & Jan-Mar 2018 Product 2015 2016 2017 Jan-Mar 2018 Olien 1,305,586 1,301,212 1,544,703 398,118 RBDPO 1,077,194 994,122 1,162,975 211,664 CPO 125,319 115,348 121,815 29,999 CDSBO 191,309 159,448 221,150 Nil Total 2,699,408 2,570,130 3,050,643 639,781 The import in the year 2017 was perhaps the highest so far and it was 18.69% higher than the year 2016. This could attribute to the increase in demand but to me Pakistan overbought which resulted in too much pressure in the local market.
IMPORT OF PALM OIL PRODUCTS FROM MALAYSIA AND INDONESIA DURING JANUARY-DECEMBER 2017 IN M.TONS (BASIS ARRIVAL) Product Malaysia % Indonesia % Total Olien 324,699 20 1,309,837 80 1,634,536 RBDPO 131,110 12 942,032 88 1,073,142 CPO 121,815 100 0 0 121,815 Malaysia 20% Indonesia 80% 577,624 2,251,869 2,829,493
PERCENTAGE OF PALM OIL PRODUCTS FROM MALAYSIA AND INDONESIA IMPORTED DURING JANUARY-DECEMBER 2015, 2016, 2017 IN M.TONS (BASIS ARRIVAL) Year Malaysia % Indonesia % 2015 17 83 2016 18 82 2017 20 80 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.
GRAPH PERCENTAGE OF PALM OIL PRODUCTS FROM MALAYSIA AND INDONESIA IMPORTED DURING JANUARY-DECEMBER 2015 2016, 2017 IN M.TONS (BASIS ARRIVAL) 90 80 70 60 50 40 83 82 80 30 20 10 0 17 18 20 2015 2016 2017 Malaysia % Indonesia %
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%
PRODUCTION OF MAJOR OILSEEDS CROP 2015-2016 Production 2016-2017 Production Oilseed Oil Oilseed Oil (000 Tons) (000 Tons) Cotton Seed Rapeseed Sunflower Seed Canola Seed Total 2966 356 2816 338 202 65 190 61 95 35 109 41 15 6 15 6 462 446 Source: Pakistan Oilseed Development Board Economic Survey of Pakistan
IMPORT OF OILSEEDS IN PAKISTAN BASIS ARRIVAL IN M. TONS FOR THE PERIOD JAN-DEC 2015, 2016, 2017 & JAN-MAR 2018 PRODUCT 2015 2016 2017 Jan-Mar 2018 Soybeans 579,724 934,935 1,907,902 409,364 Canola/Rapeseed 806,766 1,156,578 1,070,771 301,825 Sunflower 30,486 121,981 40,950 0 Total 1,416,976 2,213,494 3,019,623 711,189 Increase of about 36.41% in Imports during 2017 as compared to 2016. Imports of Soybeans have increased substantially in the year 2017 i.e. by almost 100% over 2016. 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.
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 17.3 19.9 21.0 Indonesian Palm Production 32.5 36.5 38.5 U. S. Soybean Crop 116.5 119.5 117.6 Argentina Soybean Crop 56.8 57.8 40.0 Brazil Soybean Crop 96.5 114.1 115.0 Indian Imports of Edible Oils 14.5 15.0 15.8
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 2018. 5. Currencies again played a very significant role in 2017. 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 2018..
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 100.0 mmt in 2019. 11. Meal, the driving force of today s market.
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 3.85 3.90 vs USD. Exports are expected to slow down in view of CPO export duty which will be 5% from 1 st May 2018. 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.
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 2600. While market very well supported and did not go below RM 2400, it did not reach the peak level of anticipated RM 2600. Even now I feel that Market may range between RM 2400 - 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 2300 - RM 2500 during July-October 2018.
PETER F. DUCKER
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