Price Outlook Conference & Exhibition

POC2019
4-6 March 2019
Hotel Shangri-La, Kuala Lumpur, Malaysia.

“Pakistan Consistent & Sustainable Market for Edible Oils / Oilseeds.

Presented By
Abdul Rasheed Janmohammed

Chairman Pakistan Edible Oil Refiners Association (PEORA)

Chief Executive Westbury Group

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 Around 3.0 Million Tons
Oil Extracted from Imported Seeds Around 0.80 Million Tons
 EDIBLE OIL DUTY STRUCTURE – PAK RUPEES / M.TON

Product Import Import Additional CED I.Tax FED

Duty Duty Import
(Malaysia) (Indonesia) Duty
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 CED I.Tax FED

Import Duty
CDSBO 10,600 2% 16% 5.5% 1000

IMPORT OF EDIBLE OILS IN PAKISTAN

(BASIS ARRIVAL) IN M.TONS
FOR JANUARY-DECEMBER 2016, 2017,2018 & JAN-FEB 2019

Product 2016 2017 2018 Jan-Feb 2019

Olien 1,301,212 1,544,703 1,799,243 295,718
RBDPO 994,122 1,162,975 934,886 140,187
CPO 115,348 121,815 197,302 84,514
CDSBO 159,448 221,150 96,265 15,610
Total 2,570,130 3,050,643 3,027,696 536,029

• Import in 2017 was higher by 18.69% over 2016. It remained unchanged in 2018, however, I
foresee that in 2019 our volume will increase to 3.3 million tons minimum i.e. increase of 10%
over 2017.
• 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.
 PERCENTAGE OF PALM OIL PRODUCTS
FROM MALAYSIA AND INDONESIA IMPORTED
DURING JANUARY-DECEMBER 2016, 2017, 2018 & JAN-FEB 2019 IN M.TONS
(BASIS ARRIVAL)

Year Malaysia % Indonesia %

2016 18 82
2017 20 80
2018 24 76
Jan-Feb 2019 22 78

GRAPH PERCENTAGE OF PALM OIL PRODUCTS

FROM MALAYSIA AND INDONESIA IMPORTED
DURING JANUARY-DECEMBER 2016, 2017, 2018 & JAN-FEB 2019 IN M.TONS
(BASIS ARRIVAL)
90
82
80
80 78
76

70

60

50

40

30
24
22
20
20 18

10

0
2016 2017 2018 Jan-Feb 2019
Malaysia % Indonesia %
 PRODUCTION OF MAJOR OILSEEDS CROP

2015-2016 2016-2017
Production Production
Oilseed Oil Oilseed Oil

(000 Tons) (000 Tons)

Cotton Seed 2966 356 2816 338
Rapeseed 202 65 190 61
Sunflower Seed 95 35 109 41
Canola Seed 15 6 15 6
Total 462 446
Source: Pakistan Oilseed Development Board
Economic Survey of Pakistan

OILSEEDS DUTY STRUCTURE – PAK RUPEES / M.TON

Product Import Federal Excise Sales Tax Advance I.Tax

Duty Duty

Canola / Rapeseed 5% Rs. 400 PMT 16% 5.5%

Sunflower Seed 5% Rs. 400 PMT 16% 5.5%

Soybean Seed 5% Rs. 400 PMT 06% 5.5%

 IMPORT OF OILSEEDS IN PAKISTAN
BASIS ARRIVAL IN M. TONS
FOR THE PERIOD
JAN-DEC 2016, 2017, 2018 AND JAN-FEB 2019

PRODUCT 2016 2017 2018 Jan-Feb 2019

Soybeans 934,935 1,907,902 2,450,000 275,245
Canola/Rapeseed 1,156,578 1,070,771 849,000 65,245
Sunflower 121,981 40,950 0 0
Total 2,213,494 3,019,623 3,299,000 340,490

• 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 will be lower than 2018 due to negative
margin in the Meal prices. I also expect import of Canola Seed to go down as Canola
Meal prices are even lower and the feed industry mostly prefer Soya Meal over Canola
Meal.

PAKISTAN EVER GROWING DEMAND

D – 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.

• During last four months, Pakistan has seen huge arrivals of RBD Palm Oil / Olien from Indonesia as
perhaps Indian import was diverted to Malaysia because of FTA advantage. This created huge
logistical issues viz a viz berthing and storage.

• 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.
 MARKET FACTS

Let us see where the Market could head on the basis of the following facts:

Description 2017 2018 Expected in 2019

(Million Tons) (Million Tons) (Million Tons)
Malaysian Palm Production 19.9 19.5 19.5 to 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 35.7 54.0
Brazil Soybean Crop 114.0 120.0 118.0
Indian Imports of Edible Oils 15.08 14.6 15.3

MARKET FACTS

1. Malaysian Stocks of Palm Oil in January 2019 were 3.0 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 2018.
However, very recently India have reduced duty on import from Malaysia because of FTA.
This is the reason that Malaysian Palm Olien has become expensive compared to
Indonesia.
 MARKET FACTS

6. 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.

7. Currencies again played a very significant role in 2018. Malaysian currency remained weak so
as Pakistan and Indian currencies. However, in the year 2019, Malaysian currency has the
potential to remain stable and to recover slightly.

8. 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 in the second half 2018.

“ 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 has seen its bottom. We are
already in the low production months and we see forward months showing premium on
MDEX as well as physical.

Since MDEX was below RM 2250 and there is no Export Tax on CPO, we saw CPO
finding more destination business.
In view of above, my view is that till June 2019 MDEX for Palm will remain between
RM 2150 to RM 2400.
THANK YOU