INTERVIEW-Pakistan on palm buying spree, Q1 imports up 40 pct

KUALA LUMPUR, Jan 15 (Reuters) - Pakistan has embarked on a palm oil buying spree in the first quarter of 2009, with shipments expected to surge 40 percent to 350,000 tonnes as traders exploit cheap prices to make up for poor domestic oilseed output, a top industry official said on Thursday.

The South Asian nation, the world's fourth-largest buyer of vegetable oils, usually slows down on its palm oil purchases in the January-March period to about 250,000 tonnes due to high domestic reserves and strong buying in the previous quarter.

But sharp price swings last year that prompted traders to delay purchases mean these need to be made in 2009 amid initial expectations of a strong cottonseed crop, said Rasheed Janmohammad, vice-chairman of the Pakistan Edible Oil Refiners Association.

"We are short of soft oils especially since the cottonseed crop was dismal and Pakistani traders were playing the wait-and-see game last year," Janmohammad told Reuters in a telephone interview from the port city of Karachi.

"There is now panic with Malaysian stocks falling from record levels and palm prices somewhat stabilising around 1,700-1,900 ringgit."

Malaysian crude palm futures KPOc3 have plummeted 60 percent from a record high of 4,486 ringgit in March last year. They have been trading at between 1,800 and 1,900 ringgit, supported by stock levels, which fell 12 percent in December from record levels.

Pakistan normally produces 500,000 tonnes of cottonseed oil in the November-February season, but Janmohammad expects current output to fall by 10 percent due to a lack of pesticide use and a growing preference to plant other oilseeds such as rapeseed.

Traders have completed their palm oil purchases for January while rushing to meet February's requirements of 125,000 tonnes of which only 20 percent have been covered, Janmohammad said, giving no further details on the breakdown.

Pakistan's rush to secure palm oil cargoes is in line with the rest of the region. India is also scrambling to lock in supplies, with edible oil imports in the December quarter rising 80 percent from a year earlier after a sharp drop in global prices and in anticipation of new import duties by the federal government, a leading trade body said on Wednesday. [ID:nBOM391641]

Pakistan consumes about 3 million tonnes of edible oils each year, relying on imports to meet about 80 percent of demand. Roughly 500,000-600,000 tonnes of domestic cottonseed, rapeseed and sunflower oils are produced yearly.

Crude and refined palm oil shipments from top producers Malaysia and Indonesia make up about 75 percent of Pakistan's total imports as these products satisfy strict Muslim dietary laws and are among the cheapest vegetable oils.

Normally, Pakistan's palm oil imports consist of 80 percent refined palm products and the rest crude palm oil.

In 2007, Pakistan imported 1.1 million tones of palm olein, 480,000 tonnes of crude palm oil, and 96,000 tonnes of soybean oil, data from the edible oil refiners' group showed.

The South Asian country bought 30,000 to 40,000 tonnes of refined palm products at $615-$645 a tonne for January and February shipment in the last week, Janmohammad said.