GLOBOIL INTERNATIONAL 2019 28-30 April 2019 Al-Habtoor Polo Resort, Dubai, UAE.

1. GLOBOIL INTERNATIONAL 2019 28-30 April 2019 Al-Habtoor Polo Resort, Dubai, UAE. “Challenges & Opportunities In The Vegetable Oil Sector – A View From Pakistan” Presented By Abdul Rasheed Janmohammed Chairman Pakistan Edible Oil Refiners Association (PEORA) Chief Executive Westbury Group

4. Import in 2017 was higher by 18.69% over 2016. It remained unchanged in 2018, however, I foresee that in 2019 our volume will increase to around 3.3 million tons i.e. increase of 10% over 2018. • CPO import increased in the last quarter 2018 and first quarter 2019 due to no export duty at the origin. CPO import may even go up if export duty remain ZERO at the origin.

9. IMPORT OF OILSEEDS IN PAKISTAN BASIS ARRIVAL IN M. TONS FOR THE PERIOD JAN-DEC 2016, 2017, 2018 AND JAN-MAR 2019 • Import in 2017 was higher by 36.41% which was very much exceptional and in 2018 import was higher by 9.25%. • During the year 2019 I expect import volume may be slightly lower than 2018 due to negative margin in the Meal prices. However, Canola seed prices have become very attractive due to another trade war between Canada and China.

10. Pakistan import volume for Edible Oils and Oilseeds is increasing every year due to increase in population and better purchasing power of middle class. • However, I believe we have huge impediments logistically as well as operationally to meet this growing demand. • Long term planning is needed to improve Port logistics, road transport and railways. • With the availability of CPO, Pakistan refining industry has become operative after a long time and it is hopped that Malaysia and Indonesia will maintain ZERO export tax on the export of CPO. However, the Edible Oil Refineries are now facing huge challenge to dispose off PFAD. Since practically all Refineries are now refining CPO, PFAD has become surplus and the demand of Soap Industry is not that great. • During last four months, Pakistan has seen huge arrivals of RBD Palm Oil / Olien from Indonesia as perhaps Indian imports were diverted to Malaysia because of FTA advantage. This created huge logistical issues viz a viz berthing and storage.

11. Pakistan Government is also trying to improve indigenous production for this purpose studies are going on to increase support price of seeds and to allocate extra land for the Oilseed crops. • Current Tariff Structure is such that Industry prefer to import Oilseeds rather than Soya Oil to meet the demand of Soft Oil in the Country. • Similarly, the Tariff Structure for the import of Meal is relatively higher which encourages Industry to import Oilseeds. • Some Crushing Plants are having integration with their own Feed Mills and they have synergy to import Oilseeds for their own Feed Industries.

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

13. 1. Malaysian Stocks of Palm Oil in March 2019 were 2.91 million tons. 2. The highest we have seen on MDEX was RM 2641 on 9th January 2018 and the lowest we have seen was RM 1940 on 27th November 2018 i.e. swing of almost 36%. 3. The year 2018 was dominated by Bears and the market primarily remained weak due to huge productions at origins and uncertain demand due to US-China Trade War. 4. Indonesia have seen huge production of Palm and remain very aggressive for the destination business. 5. Indian buying was inconsistent due to substantial increase in their import duties during end Half of 2018. However, recently India reduced duty on import from Malaysia because of FTA. This is the reason that Malaysian Palm Olien has become expensive compared to Indonesia. The current Indian duty structure is indeed challenging for the refiners like Pakistan.

14. Soybeans remained very vulnerable due to the ongoing US-China Trade War. However, lately both countries resumed negotiations resulted in resumption of trade activities between the two countries. However, the demand is not as expected which has triggered fall in the premiums and Index remain uncertain. Currencies again played a very significant role in 2018. Malaysian currency remained weak so as Pakistan and Indian currencies. Palm Oil / Soy Oil / Beans SND shows large stocks. Huge Global Palm Oil / Soy Oil / Beans supplies cause price pressure on Global Veg Oil markets thus slowing down destination business. Lately we have seen huge fall in the Canola seed prices due to another trade war between Canada and China.

15. “ When everything is clear……….nothing is clear.” The market facts being deliberated upon, do give us certain directions. Palm market has already come down a lot and I believe it is very close to the bottom. We see forward months showing premium on MDEX as well as physical. Since MDEX is below RM 2250 and there is no Export Tax on CPO, we saw CPO finding more destination business. Crude Oil prices are holding very well and there are chances of getting it firmer. In view of above, my view is that in the short term, MDEX for Palm will remain between RM 2100 to RM 2300.

16. Try not to become a man of success, but rather try to become a man of value. --Albert Einstein-- Glory lies in the attempt to reach one’s goad and not in reaching it. --Mahatma Ghndhi--

17. THANK YOU