13th Indonesian Palm Oil Conference and 2018 Price Outlook

1-3 November, 2017

Bali Nusa Dua Convention Center

“Emerging Trends In The Edible Oil Sector – A View From Pakistan.”.

By
Abdul Rasheed Janmohammed

Chief Executive Pakistan Edible Oil Conference (PEOC)

Chief Executive Westbury Group – Pakistan.
 EDIBLE OIL SCENARIO

Per Capita Consumption 16 kgs.

Total Consumption Around 3.9 Million Tons
Local Production Around 0.5 Million Tons
Import of Edible Oils Around 2.7 Million Tons
Oil Extracted from Imported Seeds Around 0.75 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 1% 16% 5.5% 1000
RBDPO 9230 9230 1% 16% 5.5% 1000
CPO 6850 6850 1% 16% 5.5% 1000

Product Import Duty Additional CED I.Tax FED

Import Duty
CDSBO 9100 1% 16% 5.5% 1000
 IMPORT OF EDIBLE OILS IN PAKISTAN
(BASIS ARRIVAL) IN M.TONS
FOR JANUARY-DECEMBER 2015, 2016 & JAN-SEP 2017

Product 2015 2016 JAN-SEP 2017

Olien 1,305,586 1,301,212 1,177,880
RBDPO 1,077,194 994,122 868,020
CPO 125,319 115,348 91,999
CDSBO 191,309 159,448 188,780
Total 2,699,408 2,570,130 2,326,679
 IMPORT OF PALM OIL PRODUCTS
FROM MALAYSIA AND INDONESIA
DURING JANUARY-DECEMBER 2015 IN M.TONS (BASIS ARRIVAL)

Product Malaysia % Indonesia % Total

Olien 241,961 19 1,063,625 91 1,305,586
RBDPO 99,184 9 978,010 81 1,077,194
CPO 96,894 77 28,425 23 125,319
438,039 2,070,060
2,508,099
Malaysia 17%
Indonesia 83%
 IMPORT OF PALM OIL PRODUCTS
FROM MALAYSIA AND INDONESIA
DURING JANUARY-DECEMBER 2016 IN M.TONS (BASIS ARRIVAL)

Product Malaysia % Indonesia % Total

Olien 251,559 19 1,049,653 81 1,301,212
RBDPO 75,778 8 918,344 92 994,122
CPO 115,348 100 0 0 115,348
442,685 1,967,997
2,410,682
Malaysia 18%
Indonesia 82%
 IMPORT OF PALM OIL PRODUCTS
FROM MALAYSIA AND INDONESIA
DURING JANUARY-SEPTEMBER 2017 IN M.TONS (BASIS ARRIVAL)

Product Malaysia % Indonesia % Total

Olien 269,257 23 908,623 77 1,177,880
RBDPO 56,967 7 811,053 93 868,020
CPO 91,999 100 0 0 91,999
418,223 1,719,676
2,137,899
Malaysia 20%
Indonesia 80%
 PERCENTAGE OF PALM OIL PRODUCTS
FROM MALAYSIA AND INDONESIA IMPORTED
DURING JANUARY-DECEMBER 2015, 2016 AND JAN-SEP 2017 IN M.TONS
(BASIS ARRIVAL)

Year Malaysia % Indonesia %

2015 17 83

2016 18 82

JAN-SEP 2017 20 80
 GRAPH PERCENTAGE OF PALM OIL PRODUCTS
FROM MALAYSIA AND INDONESIA IMPORTED
DURING JANUARY-DECEMBER 2015 2016 AND JAN-SEP 2017 IN M.TONS
(BASIS ARRIVAL)

83 82 80

17 18 20

2015 2016 JAN-SEP 2017

Malaysia Indonesia
 OILSEEDS DUTY STRUCTURE – PAK RUPEES / M.TON

Product Import Federal Excise Sales Tax Advance I.Tax

Duty Duty

Canola / Rapeseed 4% Rs. 400 PMT 16% 5.5%

Sunflower Seed 4% Rs. 400 PMT 16% 5.5%

Soybean Seed 4% Rs. 400 PMT 06% 5.5%

 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
 IMPORT OF OILSEEDS IN PAKISTAN
BASIS ARRIVAL IN M. TONS
FOR THE PERIOD
JAN-DEC 2015, 2016 AND JAN-SEP 2017

PRODUCT 2015 2016 JAN-SEP 2017 TO BE SHIPPED TOTAL

DURING OCT-DEC EXPECTED
2017 DURING JAN-DEC
2017
Canola/Rapeseed 806,766 1,156,578 805,743 274,000 1,079,743
Sunflower 30,486 121,981 0 0 0
Soybeans 579,724 934,935 1,502,008 541,210 2,043,218
Total 1,416,976 2,213,494 2,307,751 815,210 3,122,961

• Increase of 56.21% in Imports during 2016 as compared to 2015.

• Expected increase of about 41% in Imports during 2017 as compared to 2016.
• Imports of Soybeans have increased substantially over the years.
• Imports of Sunflower Seed has declined to Nil due to very weak Sunflower Meal Market.
 MARKET FACTS

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

1. Malaysian Palm Production was around 17.32 million tons in 2016 as compared to 19.96 in
2015 which was indeed very much lower. The production is expected to be between 19.0 to
19.5 million tons in 2017.

2. Indonesian Palm Production was around 34.0 million tons in 2016 and expected to be
between 34.0 to 35.0 million tons in 2017.

3. U.S. Soybean Crop was around 117.2 million tons in 2016 and expected to be around 119.2
million tons in 2017.

4. Argentina Soybean Crop was around 56.80 million tons in 2016 and expected to be around
57.8 million tons in 2017.

5. Brazil Soybean Crop was around 96.5 million tons in 2016 and expected to be around 114.0
million tons in 2017.

6. Malaysian Stocks of Palm Oil in September 2017 were 2.01 million tons.
 MARKET FACTS

7. Indian import of Edible Oils during 2015-16 was around 14.54 million tons and expected to be
around 15.14 million tons in during 2016-17.

8. The highest we have seen on MDEX was RM 3175 on 18th January 2017 and the lowest we
have seen was RM 2426 on 13th June 2017 i.e. swing of almost 31% within span of six months.

9. In the year 2017, while most of the Industry players were expecting improvement in
production, the supply remain very much tight and thus stocks did not accumulate which
perhaps was against market expectations.

10. Canola Seed which is an another consistent import in Pakistan has also seen a stable to firm
trend in the Global market.

11. Currencies again played a very significant role in 2017 where we have seen most of the
currencies depreciating against U.S. Dollar which ultimately affected the prices of
commodities.
 “ When everything is clear……….nothing is clear.”

FORECAST
The market facts being deliberated upon, do give us certain directions.

Time being Palm market is supply specific and it seems that there are genuine supply constraints which is
not allowing stocks to accumulate. Demand will be an issue in the last quarter 2017 / first quarter 2018,
particularly for Palm Oil as China may reduce their Palm consumption due to winter season.

Soy Oil prices have surprised everyone as most of the Industry players were bearish due to huge
production in South America. However, the slogan of “HIGHER THE PRODUCTION – HIGHER THE
PRICES” came true.

Based on the above market facts, it is my belief that Palm prices may remain between RM ------- to
RM ------- till March 18. For subsequent period it all depends how the production will catch up as though
second quarter 2018, production may increase in Malaysia/Indonesia and South American crop will also
come, we must keep in mind that in the year 2018, month of Ramadan will fall May, hence demand from
most of the destination will be there.
I can’t change the direction of the wind,
But I can adjust my sails to always reach
my destination.

Jimmy Dean
 “ In matters of style,
Swim with the current;
In matters of principle,
Stand like a rock. “

Thomas Jefferson
THANK YOU