A look at Pakistan’s palm oil import habits would not tell you this is a country in dire straits and short of dollars. Pakistan imported its highest ever monthly palm oil quantity in January 2023 at 0.35 million tons. For seven months of FY23 – palm oil import quantities have increased 9 percent to nearly 2 million tons – and Pakistan is well on course to rake up highest yearly palm oil imports.

All this while, palm oil prices have tanked from the peak last year – and seem to have plateaued for around six months. A sharp surge has been witnessed in spot prices, with a 5 percent increase in Malaysian benchmark price month-to-date, ahead of peak buying season of Ramadan. India and Pakistan were both reportedly short on palm oil stockpile – and that has kept the prices honest in international markets. That said there is a relative sense of calm in palm oil market in comparison to last year.

In terms of retail prices, cooking oil price index in January 2023 was at the lowest level since June 2022. International prices over the past year have come down by more than 40 percent. Retail prices have largely stayed flat, coming down 5 percent over last seven months. That respite could soon be over from latest SPI readings – that shows a sharp week-on-week rise throughout February.

Recall that January 2023 price index did not have the impact of sharp currency depreciation that took place towards the end of the month. Significant rupee depreciation, continuous rise in transportation costs, and a slight uptick in imported cost – will all lead to much higher cooking oil prices at retail level in the next CPI reading.

Is Pakistan really importing all this palm oil for its own use? That may not necessarily be the case. Afghanistan’s official palm oil average yearly import hovers around 0.1-0.2 million tons. Pakistan, on the other hand has an average import of 0.25 million tons in just a month. Surely, Pakistan’s size and eating habits will be much different from its Northwestern neighbor. But 200,000 tons of annual imports for a country of Afghanistan’s size do not make much sense. Pakistan may well be footing the dollar bill for its Afghan brothers’ chapli kebabs.