September 2022 Pakistan’s highest-ever monthly palm oil import bill. Before this, the highest monthly palm oil imports were recorded just in August 2022. There are suggestions that Afghanistan has come into the equation, as an explanation to the rising imported quantity. That may or may not be true, but the quantity imported is nothing out of the ordinary.

For 1QFY23, palm oil quantity imports are in fact 4 percent lower year-on-year at c.800 thousand tons. The import value at $1.1 billion is the highest quarterly number – up 28 percent year-on-year. The same in rupee terms is higher by 73 percent, which partly explains a much bigger rise in retail prices.

The international palm oil spot market price, having come down to a 15—month low in September 2022, has rebounded since. There has been a 9 percent increase in spot market prices in the last month, with the rally particularly sharp in the last week. Palm oil price currently hovers around 4,000 Malaysian Ringgit/ton – levels last seen in August 2022.

Imports, on the other hand, continue a consistent trend, showing little to no regard for substantially increased retail prices. On a 12-month moving average basis, imports at 0.23 million tons are well in line with the 5-year average, leaving little room for the imports to Afghanistan theory being the core reason behind higher imports in the last two months.

Mind you, palm oil imports had tanked to the lowest monthly number in well over a decade to less than 90 thousand tons in June 2022. That was the peak of Pakistan managing imports through LC controls. That backlog seems to have cleared as quantities have reverted to long-term mean.

Retail prices have only come down by 3 percent from the peak seen in August 2022, whereas market prices have come 48 percent off the peak between March and May 2022. The spread between landed import cost and market prices has gone up substantially, which means consumers should not expect a proportionate decrease in prices at retail stores. At least not soon.