Palm oil imports to drop below $2 billion

Price in Malaysian market falls from $1,250 to $875 per ton.

KARACHI:

Pakistan’s edible oil import bill will drop below $2 billion at the end of fiscal year 2012-13 in June following a hefty decline in prices, helping to slow the drain on much-needed foreign exchange reserves, industry officials say.

Traders said they were importing Malaysian palm oil at an average price of $875 per ton against last year’s $1,250 as international demand for edible oil shrank due to economic slowdown in the developed world.

“I think the full-year bill will be slightly less than $2 billion,” said Rasheed Janmohammad, a member of Edible Oil Refiners Association. “While the price of palm oil has come down, we are also importing more of oilseed.”

Palm oil imports dropped $279 million to $1.53 billion in July-March 2012-13, compared with $1.81 billion recorded in the same period of previous year, according to the State Bank of Pakistan. The country’s full-year oil import bill was $2.395 billion in fiscal year 2011-12.

“But there hasn’t been any significant change in demand for edible oil,” said Khawaja Arif, Chairman of Pakistan Vanaspati Manufacturers Association. “The country’s demand will remain flat at three million tons of edible oil.”

Pakistan meets most of its edible oil demand through imports. Traders said imports would range around two million tons of palm oil in 2012-13.

In its last quarterly review of the economy, the SBP pointed to the improvement in current account on the back of multiple factors, which also included a drop in palm oil import.

Traders said they expected the international price of palm oil to remain under pressure but warned that there could be a spike ahead of Ramazan. The retail price of cooking oil has actually increased despite the decrease in international palm oil rates.

Published in The Express Tribune, May 5^th, 2013.

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