Pakistan's soymeal imports to dive, as its own crushing booms

08.11.2016

Domestic soybean processing in Pakistan is booming, thanks to tariffs on soymeal imports, with crush volumes up some 250% in two years.

The increased domestic crushing is expected to boost soybean imports to record levels, while soymeal imports plunge to their lowest level for over a decade.

The Pakistani government imposed an 11% soymeal import tariff in 2014, ramping it up to 21% in 2015 onwards, in a move meant to support local processors.

"The Government of Pakistan's two-year-old decision to adjust the tariff structure to discourage imports of soybean meal and encourage imports of soybeans is, for the most part, playing out as expected," the US Department of Agriculture's Islamabad bureau said.

"Imports of soybean meal continue to fall under the current tariff structure and the oilseed and feed sectors appear to be adjusting to the shift from imported to domestically produced soybean meal."

Crushing boom

Pakistani processors are expected to crush 1.8m tonnes of soybeans in 2016-17, the Islamabad bureau said.

This is up from 1.1m tonnes in 2015-16, and just 520,000 tonnes in 2014-15.

Given that Pakistan grows effectively no soybeans, all of that crush volume will come from imports, which at 1.8m tonnes are seen at record levels.

In the last two weeks Pakistani importers are reported to have bought around 120,000 tonnes of soybeans, to be sourced from Brazil or the US.

Falling demand

But while the increased crush volumes are supportive for soybean demand, soymeal imports are seen falling to just 200,000 tonnes, the lowest level since 2003-04.

This bureau's forecast is well behind an official USDA import forecast of 600,000 tonnes, due to lower total domestic consumption.

The bureau reported that farmers had lowered their total use of protein meal in feed, "increasing their use of wheat, maize, and rice".

Despite the rapid growth in domestic soybean crushing, the bureau reported some reservations among soymeal buyers.

"Some in the feed industry have raised concerns about the quality of domestic soybean meal and the industry is working to better understand crushing and production processes," the bureau said.

And crushing capacity still falls short of domestic demand, with some 65,000 tonnes of Argentine soymeal, and 20,000 tonnes of Black Sea sunflower meal, reported purchased over the last two weeks.


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