July 15, 2009

Total Egyptian oilseed production continued to decline as farmers planted less cotton and sunflower, according to the US Department of Agriculture.

 

A similar decline is expected in 2009-10. There was a slight increase in acreage in soy plantings this year; however, it is forecast that soy production will remain stable. Egypt's major constraints to increased oilseed production will continue to be the scarcity of arable land, water and limited returns compared to other crops. Cotton is the major oilseed grown in Egypt. It is produced primarily for fibre, with oil and meal production being of secondary importance. Soy and sunflowers also are cultivated, but on a much smaller scale.

 

In 2009-10, cotton production is expected to decrease by 17 percent compared to 2008-09, due to the negative returns that farmers received from their cotton. Total cottonseed production in 2008-09 declined to 180,000 tonnes from 314,000 tonnes in MY (marketing year) 2007-08.

 

The total area of sunflowers planted declined dramatically in recent years to less than 1,000 hectares (HA). The total area in 2008-09 was 346 hectares compared to 390 hectares in MY 2007-08. The decline in recent years is due mainly to farmers reducing their planted acreage in response to the low price they receive for sunflowers. According to trade sources, it is expected that total planted area will remain about that same level in 2009-2010.

 

The total area planted with soy in 2008-09 increased slightly to 11,000 HA from 10,000 HA in 2007-08. Stagnation in soy planted area is primarily due to low prices paid to farmers by the soy processors. In addition, soy proved less competitive with other summer crops, particularly corn and rice. Finally, increased plantings and a prolonged growing season for berseem (clover), made it difficult for soy to fit into the crop rotation cycle.

 

Production of both cotton and sunflower meal declined in MY 2008-09, as a result of a drop in the production of cotton and sunflower seeds. This trend is expected to continue in MY 2009-10. Soymeal production, however, experienced a slight increase in MY 2008-09, and is likely to be about the same level in MY 2009-10.

 

Cottonseed oil is the main seed oil produced in Egypt. Total Egyptian seed oil production was down in 2008-09 to 218,000 tonnes from 239,000 tonnes in 2007-08 as a result of the decline in domestic cotton and sunflower seed production. A further decrease is expected to occur in 2009-10 especially given the anticipated drop in the amount of area planted with cotton.

 

Although there is no local production of palm oil in Egypt, there are a number of private sector palm oil processors and distributors that are using it in the manufacturing of gee and also for industrial use.

 

Egypt's total annual crushing capacity is estimated at about 1.6 million tonnes. With the decline of cotton and sunflower production and the relatively stable production of soy, several crushing facilities are operating at less than full capacity, some reaching only 50 percent. It is estimated that in 2008-09, the total oilseeds crushed will reach 1.23 million tonnes, slightly less than the 1.36 million tonnes crushed in 2007-08. Further decline is expected for MY 2009-10.

 

In the last few years, the demand for meal, especially soymeal, has risen as a result of the modernization of the livestock industry in Egypt. The increase in the use of meal has been particularly noticeable in the poultry and aquaculture sectors. Most soymeal is utilised in poultry rations, while cottonseed cake is used in livestock feed. The dairy industry is beginning to expand and modernize, and many farms are now using high quality feed rations based on protein meals. Total meal consumption in MY 2008-09 is estimated at 1.1 million tonnes, and is forecast to decrease slightly in MY 2009-10 mainly due to the decline in cotton production.

 

Egyptian per capita consumption of oils is estimated at slightly over 20 Kg/year. Given the importance of vegetable oil in Egyptian cuisine, this low consumption figure strongly suggests that vegetable oil is often used well after its optimal life span (particularly in popular restaurants).

 

Ration card holders are allowed only 0.50 Kg./person/month at a subsidized price of LE 0.50. In addition to that another 1.5 kg at LE 4.5 per kg is allowed. The average price for oil marketed by private producers ranges from LE 10/Kg. to LE 12/Kg.

 

In MY 2008-09, total Egyptian oil consumption is expected to increase by eight percent compared to MY 2007-08. Most of the increase is due to increased imports of both soy oil and palm oil.

 

Because of its relatively low price, palm oil continues to maintain its competitive position with other imported oils for both human consumption and industrial use. Palm stearin is imported mainly as a substitute for tallow in soup manufacturing.

 

Egypt is not a major oilseed importer. One of the constraining factors is that imports of cottonseed are forbidden as a precaution against the introduction of new cotton pests and diseases into Egypt. By contrast, imports of soy have continued to increase in recent years, in response to the shortfall in domestic oilseed production and also because of a growing demand for soymeal within the poultry and livestock industries. Also, with Egypt's concerns about bovine spongiform encephalopathy (BSE), there is a growing trend to substitute imported animal protein concentrate from the European Union Countries with full-fat soy from other origins.

 

Soymeal was the only meal imported into Egypt in 2008-09 and it is estimated that a total of 233,000 tonnes were imported. US soymeal exports to Egypt were close to 60,000 tonnes in MY 2007-08, compared to 90,000 MT in MY 2006-07. The balance of imports was from South America, mostly Argentina. In MY 2009-10, import levels are forecast to remain about the same level as 2008-09, with a slight increase. Total US soymeal exports to Egypt in 2008-09 are expected to decline to about 50,000 million tonnes.

 

Oil cake and other meals extracted from vegetable oilseeds are subject to an import duty of 5 percent. The current average price for imported soy is US$380 per tonne/CIF, much less than the US$570 per tonne/CIF price during the last half of MY 2008. The current import prices for imported soymeal (44 percent) and soymeal (48 percent) are US$380 and US$410 per MT/C&F, respectively. This is compared to US$470 and US$490 per tonne/C&F in 2008.

 

Egypt continues to rely on imports to meet the bulk of its oil requirements. In MY 2008-09, total Egyptian oil imports are expected to increase by about 10 percent, mostly due to the increased imports of palm and soybean oil. The increase in palm and soyoil imports is attributed to the high price of cotton and sunflower oil in the international market. In MY 2008-09, Egypt imported 260 tonnes of sunflower oil, the majority of which came from Argentina and the Black Sea region. Sunflower oil imports for 2009-10 are expected to decrease slightly. Both Argentina and the Black sea region managed to increase their exports to the Egyptian market in MY 2007-08. Soyoil imports are expected to be strong in MY 2008-09. This will have impact on total Egyptian oil imports and a further increase is expected in MY 2009-10.

 

Egyptian imports of palm oil, for both direct consumption and industrial uses, increased in MY 2007-08 in response to the decreased price of palm oil in the international market. This trend is expected to continue in MY 2008-09 and MY 2009-10. The current average prices for imported palm oil are US$850 C&F/tonne. This compared to US$1,060 per tonne during 2007-08.

 

The average current price of imported crude sunflower oil is US$732, as compared to US$1,850/tonne C&F Alexandria in MY 2007-08. The average price of imported soyoil is currently US$775 as compared to US$1,250/MT C&F.

 

With the exception of cottonseed, virtually all oilseeds can be imported freely into Egypt.