Cooking oil prices boil over

08:59, October 18, 2010      

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Following price hikes on garlic, ginger and sugar recently, consumers may find one more item in their grocery cart that is costing more — soybean oil, a common cooking ingredient.

Rising domestic and overseas prices for the bean pushed prices of the edible oil up nearly 10 percent recently. But industry watchers Sunday said the upward trend wouldn't last as inventories are abundant and supplies are expected to rise next year.

The price per ton for soybean oil rose between 450 to 900 yuan ($68 to $135) last week.

The average price of top grade oil in major regions such as China's southwest Yunnan and northeast Heilongjiang was 9,325 yuan ($1,402) per ton, an increase of 9 percent week-on-week, according to, an information provider for spot prices.

The nation's grain-reserve administrator announced plans last week to inject an additional 300,000 tons of vegetable oil into the market Wednesday to keep prices in check.

The price increase for the oil is mainly due to increasing market demand and a rise in the government-set purchase price for soybeans from growers, Liu Hongfei, president of Heilongjiang-based Jiqing Soybean Processing, told the Global Times.

The government raised the purchase price for soybeans set aside as part of a national reserve from 3.74 yuan to 3.8 yuan (56 to 57 cents) per kilogram this year. The move aims to boost soybean grower incomes and encourage them to plant more.

"We have to offer prices higher than the national reserve price in order to buy soybean stock," said Liu, who claims he has a profit margin of between 10 and 15 percent. But the situation is still better than last year when inclement weather and rising import prices resulted in only red ink on the books.

Last Tuesday, the US Department of Agriculture lowered its 2010 soybean production forecast by 1.62 million tons to 73.95 million tons, compared with September's forecast.

With the US being the world's largest producer of soybeans and China the largest importer, the lowered forecast pushed up the futures price of soybeans.

China imported 40.16 million tons of soybeans over the first nine months, up 24.1 percent year-on-year, according to the General Administration of Customs.

By Wang Xinyuan

Source: Global Times


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