06/10/04 KUALA LUMPUR: Pakistan’s palm oil imports, which surged in thelast two months, are expected to slow during the rest of the year withfull-year intake unlikely to exceed the 2003 total, an industry officialsaid.
Pakistani demand for imported edible oils will weaken in the fourthquarter because of ample domestic stocks, stronger domestic oilseedsproduction and higher oilseeds imports, said Nasir Ibrahim, director ofSadiq Vegetable Ghee Mills (Pvt) Ltd in Lahore.
Pakistan, among the world’s top four importers of palm oil, had beenaggressively buying from producers Malaysia and Indonesia in the past twomonths.
Mr Ibrahim said in September alone, palm oil shipments to Pakistan wereestimated around 200,000 tons, about double of the country’s usual monthlyimport volume. But imports are likely to slacken in the next two monthsbecause the recent buying appeared overdone, he said.
After being caught in an unexpected rally in edible oil prices at thistime last year, importers decided to stock up this year, Mr Ibrahim said. “Importers were anticipating some kind of (rally) again, so they ended upimporting huge quantities,” he said. Since Pakistan (bought) such hugequantities in August and September, we don’t expect good demand in Octoberand November. October and November imports will be pretty low, he added.
Edible oil prices surged in the last quarter of 2003 because of poor USsoybean production. This year, however, a repeat appears increasinglyunlikely because estimates so far indicate a possible bumper US soybeancrop.
Imports seen flat in 2004: Talk of a potentially large soybean harvest inthe US has dragged edible oil prices down in the past few weeks, with theMalaysian CPO futures market testing its lowest level this year late lastmonth before rebounding slightly in recent days. Unlike in 2003, edibleoil prices appear more likely now to be heading downward in the comingmonths. “If the US harvest turns out to be higher than last year, we’relooking at a bearish market from November onwards. Since people are notexpecting a friendly market, they are not in the mood to import (furtherlarge quantities), Mr Ibrahim said.
The aggressive imports in the past two months has also caused domesticstocks to build up, resulting in weak selling prices.
There is in fact a negative margin, he said. Domestic retail prices werearound $7.5 to $10 a metric ton below the current import prices, MrIbrahim said, adding this would limit import of palm oil in the comingmonths.
Pakistan’s requirement for imported palm oil would also ease in the nextfew months because of the arrival of the country’s domestic cottonseedcrop.
We will get about 100,000 tons of cottonseed oil every month for fourmonths from October onwards. The total cottonseed oil availability isexpected to be about 400,000 to 450,000 tons, Mr Ibrahim said. Pakistan’scotton crop is usually harvested from mid-September to January.
In addition to oil from indigenous cottonseed, a large quantity of oilderived from crushing imported oilseeds will also reach the Pakistanmarket in months ahead. Mr Ibrahim said it is estimated that freightbookings for imported oilseeds, mostly rapeseed from Australia and Europe,have reached a total 300,000 tons for September, October and November.Overall, Pakistan’s edible oil imports for the full year isn’t expected toexceed an estimated 1.4 million tons imported in 2003 because consumptionhas shown little growth this year. - Dow Jones Newswires