Highlights

Pakistan continues to expand its imports of soybeans in response to an increased tariff on soybean meal. 2015/16 imports are estimated at a record 1.3 million tons. For 2016/17, imports of soybeans are expected to climb to 2.0 million metric tons as the higher tariff takes full effect on sourcing decisions. Imports of soybean meal have dropped to 320,000 metric tons thus far in 2015/16 and total imports are likely to be well below 2015/16 imports.

Soybean Imports on the Rise; Meal Imports Are Down

The favorable tariff structure on soybeans versus soybean meal has transformed the import mix of oilseeds and meals in Pakistan. The increase in the import tariff on soybean meal from zero to 21 percent in the last two years has reduced soybean meal imports and encouraged higher imports of soybeans. Exports of soybeans to Pakistan reached a record 762,000 metric tons in the first eight months of 2015/16. Currently, an additional 300,000 metric tons have been booked for nearby delivery, with the expectation that a further 300,000 metric tons will be purchased for 2015/16 delivery, bring total imports to 1.3 million metric tons. Import projections for 2016/17 are expected to climb to two million tons.

Pakistan recently announced its 2016/2017 (July/June) budget, leaving the current tariff structure (that favors soybean imports over soymeal imports) in place. Soybeans are expected to comprise an increasingly large share of soy complex imports. Projected lower 2016/17 cotton production is also expected to support additional imports of soybeans. Accordingly, 2016/17, imports of soybeans are expected to climb to 2.0 million metric tons. The local crushing industry believes that the shift to imported soybeans will improve the quality and consistency of soybean meal; while certain market commentary suggests that there is still room for improvement of domestically produced meal. However, over the long term the quality of meal will likely improve as local users and producers work together.

Demand for soybean meal remains strong to meet the needs of the poultry sector. The broiler sector is expanding at an estimated annual rate of 10 percent. The layer industry is also expanding rapidly as it is able to provide a relatively cheap protein source. Dairy feed production is increasing at an accelerated pace to meet the demand of the expanding commercial dairy units that rely on high-yielding cows. Soybean meal export data indicates that Pakistan's imports of soybean meal declined to 320,000 metric tons from 1.27 million tons imported during the last year. Trade sources indicate that no additional imports are pending during the balance of the marketing year.

Other Oilseeds

Favorable palm oil pricing is expected to reduce demand for rapeseed given its high oil content and less efficacious meal. Purchases of rapeseed and sunflower seed through the first eight months of the 2015/16 marketing year are estimated at 604,384 metric tons and 20,000 metric tons respectively, significantly lower than year ago imports.

Edible Oil Import Mix

Exporter data from the first eight months of 2015/16 suggest that imports of soybean oil and palm oil increased noticeably as imports of rapeseed and sunflower seed have declined. Palm oil dominates the imported vegetable oil market and is commonly blended with other oils and sold as cooking oil. Increasing imports of soybean oil augmented with oil from imported soybeans shows a consumer shift in demand from hydrogenated oil to soft oils.