InfoSAWIT, JAKARTA — Abdul Rasheed JanMohammad, CEO of Westbury Group and Chairman of the Pakistan Edible Oil Refiners Association (PEORA), announced that Pakistan has secured large imports of refined, bleached, and deodorized palm oil (RBDPO) and olein for the last quarter of 2024. This purchase was strategically made to take advantage of lower forward prices compared to August and September spot prices. Pakistan also imported around 150,000 tons of soybean oil for the October-December 2024 period.
The recent months have seen a significant surge in vegetable oil prices, particularly for palm oil. This increase has been driven by investment fund buying positions, limited crude palm oil (CPO) supply in Indonesia, and Indonesia's plan to raise its palm oil-based biodiesel blend from B35 to B40. The Indonesian Palm Oil Association (GAPKI) estimates that this increase could boost palm oil consumption by up to 2 million tons annually.
However, the biodiesel blend expansion has sparked debate. “Is it necessary to increase the blend to B40 when palm oil prices are high and global crude oil prices are softening?” JanMohammad questioned during his presentation at a recent palm oil conference, as quoted by InfoSAWIT on Monday (11/11/2024).
The rising local palm oil prices ahead of the holy month of Ramadan add to the uncertainties, with discussions about implementing a Domestic Market Obligation (DMO) to prioritize food needs over fuel.
Upcoming festive seasons like the Lunar New Year, Ramadan, and Eid are also expected to boost palm oil demand, coinciding with the low production season typically observed from November through March 2025. Intense rainy weather anticipated in Malaysia and Indonesia is likely to further tighten supply.
Meanwhile, sunflower and rapeseed oil prices, previously lower than soybean oil, have now surged due to poor harvests, leaving the soybean oil market strong with high demand and logistical constraints. Starting December 2024, Pakistan will begin importing genetically modified (GMO) soybeans following recent approval, expected to lower costs and stabilize the vegetable oil supply chain.
At the palm oil conference, JanMohammad projected that palm oil prices on the Malaysia Derivatives Exchange (MDEX) would remain between RM 4,500 and RM 5,000 until March 2025, with prices expected to stabilize in the second quarter due to low stock levels. However, a more significant price correction is anticipated in the second half of 2025 as supply balances out. (T2)
