1. GLOBOIL INTERNATIONAL 2019 Abdul Rasheed Janmohammed
28-30 April 2019
Al-Habtoor Polo Resort, Dubai, UAE.
“Challenges & Opportunities In The Vegetable Oil Sector – A View From Pakistan”
Presented By
Abdul Rasheed Janmohammed
Chairman Pakistan Edible Oil Refiners Association (PEORA)
Chief Executive Westbury Group

2. EDIBLE OIL SCENARIO
Per Capita Consumption
Around 19 kgs.
Total Consumption
Around 4.20 Million Tons
Local Production
Around 0.40 Million Tons
Import of Edible Oils
Around 3.0 Million Tons
Import of Oilseeds
Oil Extracted from Imported Seeds
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 2%
16%
5.5%
1000
RBDPO
9230
CPO
6850
Product
Import Duty
Additional Import Duty
CED
I.Tax
FED
CDSBO
10,600 2%
16%
5.5%
1000

4. IMPORT OF EDIBLE OILS IN PAKISTAN (BASIS ARRIVAL) IN M.TONS
FOR JANUARY-DECEMBER 2016, 2017,2018 & JAN-MAR 2019
Product
2016
2017
2018
Jan-Mar 2019
Olien
1,301,212
1,544,703
1,799,243
457,367
RBDPO
994,122
1,162,975
934,886
186,927
CPO
115,348
121,815
197,302
114,539
CDSBO
159,448
221,150
96,265
35,109
Total
2,570,130
3,050,643
3,027,696
793,942
Import in 2017 was higher by 18.69% over It remained unchanged in 2018, however, I foresee that in 2019 our volume will increase to around 3.3 million tons i.e. increase of 10% over 2018.
CPO import increased in the last quarter 2018 and first quarter 2019 due to no export duty at the origin. CPO import may even go up if export duty remain ZERO at the origin.

5. Year Malaysia % Indonesia % 2016 2017 2018 Jan-Mar 2019
PERCENTAGE OF PALM OIL PRODUCTS
FROM MALAYSIA AND INDONESIA IMPORTED
DURING JANUARY-DECEMBER 2016, 2017, 2018 & JAN-MAR 2019 IN M.TONS
(BASIS ARRIVAL)
Year
Malaysia %
Indonesia %
2016 18 82
2017 20 80
2018 24 76
Jan-Mar 2019

6. GRAPH PERCENTAGE OF PALM OIL PRODUCTS
FROM MALAYSIA AND INDONESIA IMPORTED
DURING JANUARY-DECEMBER 2016, 2017, 2018 & JAN-MAR 2019 IN M.TONS
(BASIS ARRIVAL)

7. PRODUCTION OF MAJOR OILSEEDS CROP
Production
Oilseed
Oil
(000 Tons)
Cotton Seed
Rapeseed
Sunflower Seed
Canola Seed
Total
2704
324
3215
386
190 61
206 66
105 40
104 16 6 30 11
431
503
Source: Pakistan Oilseed Development Board
Economic Survey of Pakistan

8. OILSEEDS DUTY STRUCTURE – PAK RUPEES / M.TON
Product
Import Duty
Federal Excise Duty
Sales Tax
Advance I.Tax
Canola / Rapeseed 5%
Rs. 400 PMT
16%
5.5%
Sunflower Seed
Soybean Seed
06%

9. IMPORT OF OILSEEDS IN PAKISTAN
BASIS ARRIVAL IN M. TONS
FOR THE PERIOD
JAN-DEC 2016, 2017, 2018 AND JAN-MAR 2019
PRODUCT
2016
2017
2018
Jan-Mar 2019
Soybeans
934,935
1,907,902
2,450,000
275,194
Canola/Rapeseed
1,156,578
1,070,771
849,000
83,175
Sunflower
121,981
40,950
Total
2,213,494
3,019,623
3,299,000
358,369
Import in 2017 was higher by 36.41% which was very much exceptional and in 2018 import was higher by 9.25%.
During the year 2019 I expect import volume may be slightly lower than 2018 due to negative margin in the Meal prices. However, Canola seed prices have become very attractive due to another trade war between Canada and China.

10. PAKISTAN EVER GROWING DEMAND – LOGISTICAL & OPERATIONAL IMPEDIMENTS
Pakistan import volume for Edible Oils and Oilseeds is increasing every year due to increase in population and better purchasing power of middle class.
However, I believe we have huge impediments logistically as well as operationally to meet this growing demand.
Long term planning is needed to improve Port logistics, road transport and railways.
With the availability of CPO, Pakistan refining industry has become operative after a long time and it is hopped that Malaysia and Indonesia will maintain ZERO export tax on the export of CPO. However, the Edible Oil Refineries are now facing huge challenge to dispose off PFAD. Since practically all Refineries are now refining CPO, PFAD has become surplus and the demand of Soap Industry is not that great.
During last four months, Pakistan has seen huge arrivals of RBD Palm Oil / Olien from Indonesia as perhaps Indian imports were diverted to Malaysia because of FTA advantage. This created huge logistical issues viz a viz berthing and storage.

11. Pakistan Government is also trying to improve indigenous production for this purpose studies are going on to increase support price of seeds and to allocate extra land for the Oilseed crops.
Current Tariff Structure is such that Industry prefer to import Oilseeds rather than Soya Oil to meet the demand of Soft Oil in the Country.
Similarly, the Tariff Structure for the import of Meal is relatively higher which encourages Industry to import Oilseeds.
Some Crushing Plants are having integration with their own Feed Mills and they have synergy to import Oilseeds for their own Feed Industries.

12. MARKET FACTS
Let us see where the Market could head on the basis of the following facts:
Description
2017
(Million Tons)
2018
Expected in 2019
Malaysian Palm Production
19.9
19.5
20.0
Indonesian Palm Production
37.1
41.0
42.0 to 43.0
U. S. Soybean Crop
120.0
123.6
116.5
Argentina Soybean Crop
54.0
36.0
55.0
Brazil Soybean Crop
114.6
122.0
117.0
Indian Imports of Edible Oils
15.3
14.6
15.14

13. MARKET FACTS
1. Malaysian Stocks of Palm Oil in March 2019 were 2.91 million tons.
2. The highest we have seen on MDEX was RM 2641 on 9th January 2018 and the lowest we have seen was RM 1940 on 27th November 2018 i.e. swing of almost 36%.
3. The year 2018 was dominated by Bears and the market primarily remained weak due to huge productions at origins and uncertain demand due to US-China Trade War.
4. Indonesia have seen huge production of Palm and remain very aggressive for the destination business.
5. Indian buying was inconsistent due to substantial increase in their import duties during end Half of However, recently India reduced duty on import from Malaysia because of FTA. This is the reason that Malaysian Palm Olien has become expensive compared to Indonesia. The current Indian duty structure is indeed challenging for the refiners like Pakistan.

14. MARKET FACTS
Soybeans remained very vulnerable due to the ongoing US-China Trade War. However, lately both countries resumed negotiations resulted in resumption of trade activities between the two countries. However, the demand is not as expected which has triggered fall in the premiums and Index remain uncertain.
Currencies again played a very significant role in Malaysian currency remained weak so as Pakistan and Indian currencies.
Palm Oil / Soy Oil / Beans SND shows large stocks. Huge Global Palm Oil / Soy Oil / Beans supplies cause price pressure on Global Veg Oil markets thus slowing down destination business.
Lately we have seen huge fall in the Canola seed prices due to another trade war between Canada and China.

15. “ When everything is clear……….nothing is clear.”
FORECAST
The market facts being deliberated upon, do give us certain directions.
Palm market has already come down a lot and I believe it is very close to the bottom. We see forward months showing premium on MDEX as well as physical.
Since MDEX is below RM 2250 and there is no Export Tax on CPO, we saw CPO finding more destination business.
Crude Oil prices are holding very well and there are chances of getting it firmer.
In view of above, my view is that in the short term, MDEX for Palm will remain between RM 2100 to RM 2300.

16. Glory lies in the attempt to reach one’s goad and not in reaching it.
Try not to become
a man of success,
but rather try to
become a man of
value.
--Albert Einstein--
Glory lies in the attempt to reach
one’s goad and not in reaching it.
--Mahatma Ghndhi--

17. THANK YOU