PALMOILMAGAZINE, KARACHI – The 7th Pakistan Edible Oils Conference (PEOC), held on January 10-11 in Karachi, delivered a crucial message to the global palm oil industry, particularly to Indonesia and Malaysia. The conference highlighted the rising palm oil prices, which have reached premium levels, necessitating policies to maintain a balance between supply and demand.
Market analysts and industry players warned that palm oil’s dominance in the global market should not lead to complacency among producers. They emphasized the growing competition from alternative vegetable oils such as soybean and canola, which could gain market share if palm oil loses its price competitiveness.
With a population of over 240 million, Pakistan is a key market for Indonesian and Malaysian palm oil. The country’s domestic edible oil demand stands at 4.5 million tons per year, while local production is only around 0.5 million tons. To bridge this gap, Pakistan imports approximately 3 million tons of edible oil annually, with palm oil accounting for 2.9 million tons in 2023.
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Pakistan’s heavy reliance on palm oil makes Indonesia’s policies highly influential in its market. One key policy under discussion is Indonesia’s shift from the B35 to B40 biodiesel program, which could impact global palm oil supply.
According to information obtained by Palmoilmagazine.com on Thursday (January 30, 2025), Chairman of the Pakistan Edible Oil Refiners Association (PEORA), Abdul Rasheed Jan Mohammad, highlighted Pakistan’s recent policy allowing the import of genetically modified (GMO) soybeans. This decision is expected to increase soybean supply in the coming months, potentially countering the impact of rising palm oil prices.
From Indonesia’s perspective, Head of Foreign Affairs at the Indonesian Palm Oil Association (GAPKI), Moh. Fadhil Hasan, pointed out that stagnation and declining palm oil production result from slow replanting programs, land expansion restrictions, and decreasing productivity. GAPKI data shows that Indonesia’s peak palm oil productivity was between 2006-2011, averaging 3.9 to nearly 4 tons of CPO per hectare per year. However, this figure has declined to 3.4 tons in 2023.
Meanwhile, although Malaysia holds only a 10% share of Pakistan’s palm oil market, it remains committed to strengthening trade relations with the country. Malaysia’s Minister of Plantation and Commodities, Datuk Seri Johari Bin Abdul Ghani, acknowledged Indonesia’s dominance in Pakistan’s palm oil market, partly due to the Preferential Trade Agreement (PTA) signed between Indonesia and Pakistan in 2013, which provided Indonesia with trade advantages.
However, Malaysia is not staying idle. The Malaysian government is working to enhance trade cooperation through a revision of the Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA) to ensure mutual benefits. Additionally, Malaysia is committed to maintaining stable palm oil supplies by improving land productivity. This strategy has proven effective, with Malaysia increasing its palm oil exports by 12% last year without expanding plantation areas.
The conference reinforced that global palm oil pricing and supply will remain strategic concerns for both producers and consumers. Adaptive policies and strong trade strategies will be key to maintaining palm oil’s position in the global market. (P2)
