Pakistan palm oil imports were back near $300 million in July 2022, having nearly halved in June 2022. The decline in June was attributed more towards the Indonesian government ban on palm oil exports (that proved short-lived) than rising inventory levels. But the sharp decline in international spot market has not really benefitted Pakistan – with the unit values staying virtually unchanged from the peak.
It is unclear if it is the rub of the green that traders always ill-time the imports, or there is the typical stock market herd mentality of joining a bull rally – but a 42 percent decline in palm oil price from May 2022 –has led to a 3 percent increase in dollar/unit. From last month, prices have gone down 31 percent, whereas unit value only went down by 3.5 percent.
International palm oil prices have halved from the peak seen in March 2022. Unsurprisingly, cooking oil prices at retail level have not come down. The more obvious reason is the actual import cost which has stayed high over the months. The other reasons are significantly depreciated currency and substantial rise in transportation fuel cost. Prices at retail level will not come down as swiftly, even if the palm oil traders manage to get the rub of the green their way and time the imports better for once.
In quantity terms, palm oil imports for two straight months have been recorded on the lower side. June 2022 saw imports at 87 thousand tons – one third of the 12-month average of 246 thousand tons and lowest in well over a decade. July’s import of 188 thousand tons, though higher month-on-month is still lower than 5-year monthly average. Only lower number other than June 2020 came at the back of highest-ever monthly imports, whereas this comes right after a multiyear low.
Palm oil imports in quantity terms in FY22 were down 12 percent year-on-year – the biggest decline in a decade. Palm oil demand has historically been found undeterred, but could this rally be testing the demand? Either that or the market is sitting at high inventories built at even higher prices, which will ensure the store prices are not coming down anytime soon.
Comments
Comments are closed.