Monday June 17, 2024

Pakistan accelerates soybean oil imports amid price tumble

By Salman Siddiqui
December 25, 2015

KARACHI: Pakistan imported significant quantity of soybean oil in the last five months (July-November 2015) since it was available at lower prices due to oversupplies at world markets, while freight charges all the way from North America and Brazil cost less than half of what they were last year, industry officials said.

"Soybean oil was available at a discount of $100/ton this year," said A Haseeb Khan, a representative at an agent firm of importers in Pakistan.

Pakistan has imported soybean oil at 95,384 tons (worth $85.52 million) in the five months. The import quantity is over 160 percent higher than 36,506 tons (worth $35.59 million) imported in the same five months last year (2014), reported Pakistan Bureau of Statistics (PBS).  Khan said importers also benefited from the tumbled crude oil prices at world markets (WTI Spot at $36-37/barrel as on Wednesday). Soybean oil exporters in North America and Brazil, who have booked ships for one-year or so, offered the importers here a freight charge which was less than half of what it was last year. "This was an additional benefit to the (soybean) oil importers," he said.

Khan said manufacturers blend soybean oil with palm olein oil to produce a good quality cooking oil and ghee. "Soybean oil is always a better choice and substitute of banola oil and mustard oil for blending," he said.

Shaikh Amjad Rasheed, former chairman of Pakistan Vanaspati Manufacturers Association said it was more interesting to note that cost of the imported soybean oil came less than the locally produced banola oil and mustard oil.

"The landed cost of soybean oil comes at Rs3,800-4,000/40kg as compare to locally produced banola oil at Rs4,000-4,200/40kg...similar is the case with mustard oil," he said, adding this was off-season for banola and mustard oil in Pakistan.

"Manufacturers should blend 30 percent soybean oil to produce better quality cooking oil and ghee, but many blend around 10-20 percent or less," he said.

Rasheed said one can see more imports of soybean oil next month (December 2015). And from January onwards, its import would decline gradually.

Khan, however, is of the view that Pakistan would again place import orders for soybean oil from March 2016 onwards when North America and Brazil would throw new supplies of the oil into the world markets.

"Price of soybean oil would remain low next year as well due to downward trend in crude oil and problems in world economies, including China and India," he said.

Hanif Motlani, an importer of soybean oil said, Pakistan has placed import orders for soybean oil at $690-675/ton in the said five months (July-November 2015) as compared to $740-745/tons in 2014. "Pakistan has imported huge quantity of the oil after several years...there was a time when Pakistan used to import high quantities of soybean oil, but the country had reduced imports due to spike in its price," he said.

He said soybean oil carries a unique property which other blending oils lack. "This (soybean oil) does not freeze in low temperature seasons," he said.

Besides, Pakistan is estimated to import around 2.5 million tons palm and palm olein oil from Malaysia and Indonesia this year. The imported oil would meet around 75 percent local needs. Remaining 25 percent need would be met through locally produced banola and mustered oil, or imported soybean oil.

The PBS reports that the country has imported 1.17 million tons (worth $720.38 million) in the said five months which is 18 percent higher than 991,213 tons ($797.32 million) imported in the same five months in 2014.