DOW JONES NEWSWIRES


  Pakistan's vegetable oil imports are forecast at a record 2.35 million tons
in the 2009-10 marketing year, up 13% from last year, according to a U.S.
Department of Agriculture attache report posted Tuesday on the Foreign
Agricultural Services Web site.

  Estimates contained in attache reports aren't official USDA data. The text of
the attache report follows.


  Report Highlights

  Pakistan's vegetable oil imports are forecast at a record 2.35 million tons
in MY2009/10, 13 percent higher than last year's record imports of an estimated
2.1 million tons. Nearly 70 percent of domestic demand for vegetable oil is met
through imports, 98 percent of which comprised of palm oil. Pakistan's MY
2009/10 imports of soybean meal are projected at a record 350,000 tons, to be
largely sourced from India. Imports of oil seeds are expected to decline, and
are forecast at 1.1 million tons (70 percent rape seed and 30 percent sunflower
seed).

  Executive Summary

  Pakistan is a net importer of oilseeds and edible oils. Domestic production
of edible oils is only sufficient to meet 30 percent of total demand. The local
production/import ratio has remained steady over the past decade. Domestic
oilseed production includes cotton, sunflower seed, and rapeseed. The
introduction of canola, olive and oil palm cultivation has met with limited
success. Despite the rapidly increasing cost of oilseed imports, increased
oilseed production has not been made a Government of Pakistan (GOP) priority.

  MY 2009/10 oilseed production is forecast at 5.1 million tons, two percent
higher then last year's estimated 5.0 million ton crop. Cotton seed regularly
accounts for about 80 percent of Pakistan's total oilseeds production. Imports
of oilseeds are forecast at 1.1 million tons (75 percent of which are
rapeseed), down from the record 1.25 million tons imported in MY 2008/09.
Consequently the total supply of oilseed available for crushing in MY2009/10 is
down slightly and forecast at 6.2 million tons.

  MY 2009/10 domestic meal production is forecast at 2.6 million tons, down
slightly from last year's level due to lower oilseed imports. MY 2009/10
imports of soybean meal are forecast at a record 350,000 tons, up 17 percent
from the previous year. Virtually all of Pakistan's soy meal imports are
sourced from India.

  MY 2009/10 local oil production is forecast at 1.1 million tons, down
slightly from the previous year. Vegetable oil imports are forecast at a record
2.35 million tons, an increase of 13 percent relative to MY2008/09. Palm oil
accounts for 98 percent of the total imports.

  OILSEEDS

  Production

  MY 2009/10 total domestic oilseed production is forecast at 5.1 MMT, 2
percent higher then last year due to an anticipated increase in cottonseed
production. Production of sunflower seed is forecast at 600,000 tons down about
12 percent from last year's record production level of 685,000 tons. Rapeseed
production is anticipated at 220,000 tons down slightly from last year.

  Cottonseed

  Pakistan's primary oilseed crop, cottonseed, accounts for 80 percent of
domestic oilseed production. Seed cotton contains both lint and cottonseed.
Lint is the basic input for the domestic textile industry - and a major
contributor to Pakistan's exports. Oil and meal, derived from cottonseed, are
secondary products.

  MY 2009/10 cottonseed production is forecast at 4.3 million tons an increase
of 3 percent over the previous year's output, mainly due to the use of higher
yielding biotech seeds. Farmers are more motivated to improve cotton
productivity in response to stronger cotton prices.

  In MY 2008/09, cottonseed production increased by 7 percent over the prior
year's output due to improved productivity resulting from favorable weather
conditions during the growing season.

  Rapeseed:

  Traditionally, rapeseed is produced for fodder and mixed with wheat straw -
as well as for oil. Domestic rapeseed accounts for only 4 percent of total
oilseed production in Pakistan. Efforts to replace rapeseed with
higher-yielding canola varieties have not met with much success due to the high
cost and lack of availability of quality hybrid seeds, susceptibility to pest
attack and problems with uniform maturity and seed shattering. MY 2009/10
rapeseed production is forecast at 220,000 tons down slightly from last year's
estimated crop of 225,000 tons.

  Sunflower seed:

  MY 2009/10 sunflower seed production is forecast at 600,000 tons down about
12 percent from last year's record production level of an estimated 685,000
tons. Due to higher, MY2008/09 international oil prices, solvent extractors
assured farmers remunerative prices for their sunflower seed, and in response,
MY2008/09 production increased by 17 percent compared to the previous harvest.

  Consumption:

  Supporting the GOP's policy of importing oilseeds, the crushing industry has
improved its efficiency by overhauling older machinery and installing high-tech
solvent extraction equipment.

  Trade:

  The MY 2009/10 oilseed import forecast includes 800,000 tons of
rapeseed/canola (mainly from Canada and Australia), and 300,000 tons of
sunflower (mainly from Australia). Since June 2005, the GOP has exempted
oilseeds from customs duty and sales tax. Vegetable oils are assessed a fixed
customs duty along with a 15 percent sales tax and 2 percent withholding tax
upon import.

  MY 2008/09 oilseed imports were 1,250,000 metric tons. Rapeseed/canola seed
are typically sourced primarily from Canada and Australia.

  Government Support

  There is no support price mechanism for oilseeds and the GOP does not procure
oilseeds. Oilseeds are a low priority crop as compared to other crops like
wheat and rice. The lack of availability of quality seed, poor coordination
among research organizations, lack of suitable machinery for planting,
harvesting and threshing operations, improper dissemination of site-specific
production technologies and lack of research-based crop management are some of
the major constraints being faced by the oilseed sector.

  Preferential tariff treatment of oilseed imports assisted in the development
of a viable domestic crushing industry which is now in a position to help
growers increase oilseed production. Over the last few years, the solvent
extraction industry has offered better prices and technical services to
sunflower growers, resulting in increased planting and increased production.