KARACHI: Pakistan is likely to import 3.6 million metric tonnes (MT) of palm oil in the current fiscal year amid increasing demand, a sector study forecast on Thursday.
According to a research report by Pakistan Credit Rating Agency (PACRA) on edible oil, Pakistan is the fourth largest importer of palm oil in the world and refined palm oil accounts for 98 percent of Pakistan’s total edible oil imports and is sourced mainly from Malaysia and Indonesia.
“The sector is highly dependent on imported oil seeds and refined palm oil to meet the local demand, hence the exposure to exchange rate and international price fluctuation is higher,” the study said.
Being the essential food item, the demand of edible oil had remained largely stable, fluctuating within a range of 4.5-4.8 million tonnes in the last five years, it said, adding that during FY2021, the local consumption of edible oil stood at 4.8 million tonnes, up one percent year-on-year.
The PACRA report indicated the demand was robust despite anti-Covid lockdowns and in the long-term, the increasing population was expected help the sector sustain growth.
“More than 70 percent of local demand is met through imported edible oil and oilseed and significant dependence on imported raw material increases the supply chain risk and exposure to exchange rate movements,” the report said as it covered the future outlook.
It said prices of different variants of oilseeds and edible oil were at historical highs because of supply chain disruptions caused by the Covid-19 lockdown and tightened USA supplies.
“Prices are expected to remain volatile amid supply concerns,” it anticipated and added, “In line with international ones, the local prices of edible oil have been increasing sharply since January 2020”.
With the expected increase of short-term demand and tightened international supplies, the local prices were expected to continue to rise until any intervention by the government, the report said.
“Due to non-availability of other alternatives the major burden of increase in international oil prices is borne by the end consumers, which, on the other hand, helps in sustaining the margins of local players,” the study said.
Source: The News International