1,077,194 MT of palm oil imported in 2015: Data show traders importing soybeans on premium

Total import of RBD palm oil stood at 1,077,194 metric tons from Malaysia/Indonesia in 2015; RBD palm olein 1,305,586 MT from Malaysia/Indonesia; crude palm oil (CPO) 125,318 MT from Malaysia and import of crude degummed (CDSBO) amounted to 191,308 MT from Argentina/Brazil during this period.
According to latest data compiled by the industry, the percentage of palm oil products from Malaysia and Indonesia imported during January-December 2015 in tons (basis arrival) revealed that the share of Malaysia in total imports of palm oil is 17 percent and Indonesia's 83 percent.
Industry sources said that the new trend is being created in Pakistan of importing soybeans on premium over CBOT basis. Year 2015 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. 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 statistics have proved that Pakistan buyers covered reasonable quantity of Soybeans in the year 2015 and have also covered the requirement for the first half of 2016. This shift of buying Soybeans will ultimately reduce the import of other oilseeds like canola, Rapeseed and Sunflower Seed.
Referring to the India structure on the commodity, experts said that the government of India is seriously considering to reduce the Duty on Oilseeds from present 30% to 5 or 10%, if this happens, it would encourage import of high content oilseeds like Rapeseed and Sunflower seeds. This will change the current level of Import of Vegetable Oil by India, as it happened in China. Indian government is currently considering raising import duty on edible oils to safe guard the interest of farmers and considering increasing duty difference between crude and refined oils.
The industry analysis revealed that Pakistani edible oil market is dominated by Palm oil with a 71 percent market share. This is mainly due to low cost and prevalent use of Hydrogenated Oils ('Banaspati') at 60%, compared to Cooking Oils at 40%. For comparison, current local price of refined Canola oil is around $1,100 per MT, whereas it is $860 for RBD Palm Olein.
There is little product differentiation among seed oils, except for an inelastic demand of about 200-250K MT for canola oil. Cottonseed is processed in small oil mills with mechanical pressing only. Cottonseed cake with 7-8 percent residual oil is sold as cattle feed. Overall impact of this practice is low oil yield for cottonseed oil. Growth of local crops has been disappointing; with less than 15% of the total edible oil demand being met through locally produced oilseeds currently. High support price for wheat being maintained by government at Rs 1,300 per 40-kg ($310 per MT), which is too high compared to the international market, and hinders growth of other crops such as oilseeds.
The analysis said that the poor sowing seed quality, giving very low yields, has also discouraged farmers from growing oilseed crops. There are about 80 solvent extraction plants in the country with an average capacity of 200 TPD, or a combined annual capacity of more than 4.8 MMT. Industry-wide capacity utilization is fairly low. Installed capacity is mostly geared for processing canola. Small plant size and some unique processing attributes result in premium quality of canola/rapeseed meal and fetch a quality premium in the export market. Import of Soybean Seed: Pakistan is the 11th largest poultry producer in the world; with a production of more than 8 million metric tonnes of poultry feed. With the recent trend among feed millers to increase soybean meal in the formulation, the demand for soybean meal is rising rapidly. In 2013 and 2014, Pakistan imported around 700,000 MT of soybean meal. In 2015, about 550,000 MT of soybean meal was imported, whereas about 435,000 MT was produced locally, locally, implying almost a 1.0 million metric ton market. Current overall inclusion rate for soybean meal in poultry feed is about 12% which is fairly low. Given that poultry is growing steadily at a rate of about 8%, there is great potential for growth in crushing of soybeans.
For 2016, industry expects the following import volumes for oilseeds: Canola 666K MT; Soybeans 1,146K MT. From 2017 onwards, Canola seed imports can be expected to decline initially to 550K MT and thereafter grow organically at 4-5% to cater for the inelastic demand for canola oil.
From 2017 onwards, it is expected soybean seed imports to grow at a rate of 15- 20%, to reach the 2.0 MMT mark in 2020. Total oilseed imports to reach 2.0 MMT mark in 2018, it added.
It is important to mention here that the said data and analysis were discussed during the recently held international conference, ie, Pakistan Edible Oil Conference (PEOC) and Priceoutlook-2016.