Edible Oil Prices Rise Looming Ahead and Experts Said There is Abundant Supply in the Market
October 25, 2010
The rise of edible oil prices in the China's retail market looms ahead. Shang Qiangmin, the director of China National Grain and Oils Information Center on October 25th said with the ample supply of domestic edible oil, the increased stock of oils during recent years and the upcoming launch of fresh local soybeans, the inflation will be suppressed.
Shang Qiangmin said that, as China's economy is to the first to be recovered, from the fourth quarter of 2009, the oil consumption has registered retaliatory growth. At present, China's annual consumption of edible oil rises from 23 million tons to 24 million tons, 60% of which needs to be imported from other countries. Among edible oils consumed by Chinese, the soybean oil accounts for nearly 40% last year.
China's edible oil prices jump started from the late June and early July. In the early July, the bulk price of bulk soybean oil of first rate in the coastal areas was RMB 7100 per ton which rises from RMB 9,400 to RMB 9,500 per ton. But there are still oil retailers placed their products on sale.
In addition there has been an increase in the policy turnover of the Chinese central government and local governments as well as the business inventory turnover of grain and oil companies. Accordingly, Shang Qiangmin believed that there is no shortage of edible oils in China. It would be difficult for a single manufacturer to raise the oil price.
In an interview, Shang Qiangmin said that since China became a net importer of soybeans in 1995, the soybean imports increased on the yearly basis. The Import in 2008 was 37.44 million tons and reached 42.55 million tons in 2009 which is expected to reach 54 million tons this year.
As to bullish oil prices on the futures market, Shang Qiangmin held that there is the speculation of oil. He pointed out that next year it is less likely to have the high growth rate again like this year. He also warned that the futures investors betting on the substantial rise of oil prices will be exposed to investment risks if there is a great variation between the prediction and the real situation.
Shang Qiangmin held that the changes in the supply and demand in the global soybean market are still on board next year. Next year the global demand for soybeans will rise from the current 238 million tons to 2.52 million tons and the output will be reduced from the current 260 million tons to 255 million tons. Yet the output then will exceed demand.
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