1. Conference Proceedings: Partnered by – Reshamwala Shipbrokers
Emerging Trends In The Edible Oil Sector – A View From Pakistan
Presentation by: Abdul Rasheed Janmohammed
Globoil India 2015, September 29, 2015
Mumbai

2. GLOBOIL INDIA 2015 Abdul Rasheed Janmohammed
28th – 30th September 2015
Renaissance Mumbai Convention Centre Hotel
“Emerging Trends In The Edible Oil Sector – A View From Pakistan.”. By
Abdul Rasheed Janmohammed
Vice Chairman – Pakistan Edible Oil Refiners Association (PEORA)
Chief Executive Officer – Mapak Edible Oils (Pvt.) Limited – JV Project Pakistan-Malaysia.

3. EDIBLE OIL SCENARIO Per Capita Consumption 17kgs. Total Consumption
Around 3.5 Million Tons
Local Production
Million Tons
Import of Edible Oils
Around 2.5 Million Tons
Oil Extracted from Imported Seeds
Around 0.5 Million Tons
Total Import Bill of Edible Oil about
US$ 1.8 to 2.0 Billion.
Total Import Bill of Oilseeds about
US$ 0.5 to 0.6 Billion.

4. Edible Oil Duty Structure – Pak. Rupees / M.Tons
Product
Import Duty (Malaysia)
Import Duty (Indonesia)
CED
I.Tax
FED
Olien
16%
5.5%
1000
RBDPO
9230
CPO
6850
Product
Import Duty
CED
I.Tax
FED
CDSBO
9100
16%
5.5%
1000

6. Import of Edible Oils in Pakistan (Basis Arrival) in M.Tons
For January-December 2013, 2014 and January-August 2015
Product
2013
2014
Jan-Aug 2015
Olien
979,308
1,093,958
853,137
RBDPO
998,619
1,122,857
610,150
CPO
278,118
104,290
106,561
CDSBO
55,214
122,862
45,290
Total
2,311,259
2,443,967
1,615,138
Anticipated Arrival of Soy Oil during September –December 2015
As of To-date
Sept-Dec Anticipated Jan-Dec 2015
134,350 MT ,640 MT

7. Import of Palm Oil Products From Malaysia and Indonesia
During January-December 2013 in M.Tons (Basis Arrival)
Product
Malaysia %
Indonesia
Total
Olien
864,332 88
114,976 12
979,308
RBDPO
225,374 23
773,245 77
998,619
CPO
224,128 81
53,900 19
278,118
1,313,834
942,211
2,256,045
58%
42%

8. Import of Palm Oil Products From Malaysia and Indonesia
During January-December 2014 in M.Tons (Basis Arrival)
Product
Malaysia %
Indonesia
Total
Olien
416,540 38
677,418 62
1,093,958
RBDPO
120,515 11
1,002,342 89
1,122,857
CPO
99,790 96
4,500 4
104,290
636,845
1,684,260
2,321,105
27.50%
72.50%

9. Import of Palm Oil Products From Malaysia and Indonesia
During January-August 2015 in M.Tons (Basis Arrival)
Product
Malaysia %
Indonesia
Total
Olien
206,064 24
647,073 76
853,137
RBDPO
65,042 11
545,108 89
610,150
CPO
78,147 73
28,414 27
106,561
349,253
1,220,595
1,569,848
22%
78%

10. Percentage Of Palm Oil Products From Malaysia and Indonesia Imported
During Jan-Dec 2013, 2014 and Jan-Aug 2015 In M.Tons (Basis Arrival)
Year
Malaysia %
Indonesia %
2013 58 42
2014
27.50
72.50
Jan-Aug 2015 22 78

12. Oilseeds Duty Structure – Pak. Rupees / M.Tons
Product
Import Duty
FED
Sales Tax
Advance I.Tax
Canola/Rapeseed 2%
Rs. 400 PMT
16%
5.5%
Sunflower Seed
Soybean Seed 6%

13. Production of Major Oilseeds Crop
(000 Tons)
(000 Tons)
(000 Tons)
Cotton Seed
3324
400
3592
431
3450
414
Rapeseed
216 66
189 60
181 58
Sunflower Seed
244 95
190 76
178 68
Canola Seed 16 6
Total
567
573
546
Source: Pakistan Oil Seed
Development Board / Economic Survey of Pakistan.

14. Import of Oilseeds in Pakistan (Basis Arrival) in M.Tons
For January-December 2013, 2014 and January-August 2015
Product
2013
2014
Jan-Aug 2015
Rapeseed / Canola
534,384
982,870
549,695
Sunflower
185,985
193,186
30,486
Soybean Seed
9,094
254,143
Total
729,369
1,185,150
834,324

15. Anticipated Arrival of Canola / Rapeseed for the period of
September –December 2015
And
January-June 2016
Sept-Dec 2015
Jan-June 2016
256,100 MT
NIL
Anticipated Arrival of Soybean for the period of
September –December 2015
And
January-June 2016
Sept-Dec 2015
Jan-June 2016
480,000 MT
372,000 MT
If we add the arrived quantity and the anticipated arrivals of Canola / Rapeseed/Soybeans, the total quantity this year will touch Million Tons.

16. New trend is being created in Pakistan of importing Soybeans on Premium over CBOT basis has been the first year that Pakistan have embarked very aggressively on the journey of importing Soybeans due to very weak Global prices and duty advantage over other Oilseeds. I must admit that Pakistan entrepreneurs have done a very innovative work by importing Soybeans only on premium over CBOT. This has given them a great flexibility of booking physical prices as and when required which is very much suitable in the bearish market.
The above statistics will prove that Pakistan buyers covered reasonable quantity of Soybeans in the year 2015 and have also covered the requirement for the first half of This shift of buying Soybeans will ultimately reduce the import of other Oilseeds like Canola, Rapeseed and Sunflower Seed.

17. MARKET FACTS
Let us see where the Market could head on the basis of following facts:
1. Malaysian Palm Production was 19.6 (M) tons in 2014 against 19.2 (M) tons in 2013 and expected to be 19.8 (M) tons in 2015.
2. Indonesian Palm Production was around (M) tons in 2014 against around (M) tons in and expected to be around (M) tons in (Indonesian figures can never be accurate as no official data available).
3. US Soyabean Crop was around (M) Tons in 2014 against (M) Tons in 2013 and expected to be around (M) in 2015.
4. Argentina Soyabean Crop was around (M) Tons in 2014 against (M) Tons 2013 and expected to be around (M) Tons in 2015.
5. Brazilian Soyabean Crop was 94.6 (M) Tons in 2014 against (M) Tons 2013 and expected to be around (M) Tons in 2015.
Malaysian Stocks of Palm Oil in August 2015 were 2.494(M) Tons .
Indian import was million tonnes of edible oil during against million tonnes in and expected to be around 13.0 (M) Tons in

18. The year 2015 has been very vulnerable year for Edible Oils
The year 2015 has been very vulnerable year for Edible Oils. With due respect, all forecasts did not prove right as perhaps everyone under estimated the supplies. The highest we have seen on MDEX was RM 2400 on 4th Mar 2015 and the lowest we have seen was RM 1863 on 25th August 2015 i.e. the variation of 22.4% during Jan-Aug. All the Bulls were expecting El Niño to come but perhaps it did not materialized and so far the Bears win the race.
Fundamentally all commodity markets remained very weak due to extremely low prices of Crude Oil and weak Chinese economy. Crude Oil which is mostly termed as the Political Commodity have been the worst performer. Since the Crude Oil market is the driving force for all other commodities, the bearish trend is following the Crude Oil. China being one of the largest economy is passing through a very gloomy period and is affecting the markets all over the World.
Another area which has been very disturbing force is the depreciation of currencies in most of the Countries. Time being it is extremely difficult for the Industry players to plan out their requirements due to severe Global crises in commodities as well as in currencies.
Huge crop all over the World of Edible Oils and Oilseeds always push the sellers to chase buyers which results in the glut of oils at the destinations.
12. Since production is multiplying in Indonesia, this origin will not only remain very competitive but will be an aggressive seller in terms of quantity particularly for Refined Palm Oil. Pakistan is perhaps the safe home for Indonesian Refined Palm Oil and this is the reason that prices of RBD Palm Oil remain much lower as compared to Olien for Indonesian origin. This will put additional pressure on the prices of PFAD as well being by-product of RBD Palm Oil.

19. FORECAST
The market facts being deliberated do give us certain direction. In the current year 2015 most forecasts proved incorrect as supply remained extremely large and exceeded all expectations.
While there is no doubt that supply still remain huge particularly Edible Oils and Oilseeds, there is a general belief that prices have already come down a lot. Palm Oil prices have slided too much. We have seen in past that Malaysia have the capacity to take care of their 2.00 million tons stocks without any problem, but this year even at lower stocks, markets were coming down purely on sentiments.
While we are anticipating increase in production figures during July-October 2015, we will be entering into the low production months commencing from November onwards.
Based on the above market facts, it is my belief that Palm prices may not go below RM 2200 and has the potential to go upto RM 2500 by December 2015.
For first quarter 2016 I believe Palm prices may remain between RM to RM 2700

20. I would like to conclude my Presentation with famous quote :
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 there.
:- Indira Gandhi

22. Thank You

23. Conference Proceedings: Partnered by – Reshamwala Shipbrokers