Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors. China's Edible Oil Price will See an Increase -- It is reported that China’s major edible oil manufacturers have presented the application to National Development and Reform Commission for lifting the price of edible oil. The price of Arawana blend oil, bean oil and rape oil will see an adjustment, others types of Arawana oil not included. The price of Fu Linmen bean oil and rape oil will also be adjusted soon.



Reason for raising China’s edible oil price is that both international and domestic markets of raw material of edible oil are recovering these weeks and thus the raw material price goes higher than the factory price. On one hand, due to the financial crisis, the output of South American soybean which is the main raw material of China’s edible oil goes down and the forward price of soybean goes high; on the other hand, China continuously issues policies of purchasing soybean and rapeseed for more reserve, which makes the price of oil crop rise all the time on both international and domestic market.


According to statistics, the CNF average price of China’s imported soybean in April 2009 reached 404 USD/ton, 7 USD/ton higher than that of March and 385 USD/ton higher than the expected price. The cost of China’s imported soybean stood at 3290 USD/ton and the average profit of oil factory at early stage reached 380 USD/ton in April. In May, the price and cost of imported soybean stayed almost the same as that of April at respectively 405 USD/ton and 3297 USD/ton. At present, the CNF offer of South American soybean in June is 476 USD/ton, 100 USD/ton higher than that of last week. And the cost will be 3860 USD/ton. If bean oil is sold at the present price, oil factories will suffer a loss of 131 USD/ton at early stage of oil pressing.


Because soybeans are mainly from international market, the price of edible oil is more affected by international factors. Due to the planting season at present, the international forward price of soybean will continue to rise for one or two months and thus the price of edible oil will also see an increase of 10 percent this time. It is predicted that the rising price of edible oil will not give rise to the inflation under such a situation totally different from that of 2008.


Considering the fact that domestic bean oil mainly relies on import, Chinese government issued “Adjustment and Revitalization Plan for Light Industry” on May 18th, 2009 to encourage further development of oil crop. The increased output of China’s peanut oil reached 1 million tons, rapeseed oil 1 million tons, cottonseed oil 500,000 tons and special oil 1 million tons.


Source: China Research and Intelligence

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Eileen Gu