Economy

Soybean, oil supplies 'ample'

By Lan Lan (China Daily)
Updated: 2010-10-26 10:23

A woman sits at a stall selling cooking oil at a market in Shanghai. [Photo/Agencies]

Stockpiles, growing imports will help ward off price increases

BEIJING - Supplies of soybeans and edible oil can satisfy domestic demand because of adequate stockpiles and growing imports, a senior foodstuffs expert said on Monday.

"We have ample stockpiles," Shang Qiangmin, director of the China National Grain and Oils Information Center, told reporters.

Price hikes have hit China's edible oil market in the past three months. The average wholesale price for soybean oil increased by more than 30 percent from 7,100 yuan ($1,066) a ton to 9,400 yuan a ton in late October, figures from the center showed.

The wholesale price hike has sparked worries that the increase will be passed on to the retail market shortly. But Shang said supplies can easily satisfy market demand.

"The rally was driven by price increases on the international market due to the high synergy between the domestic and global market," he said.

The country's soybean supply is adequate and imports will see a huge increase this year, Shang said. Soybean imports are expected to reach 54 million tons, surpassing last year's 42.55 million tons, he said.

China's soybean imports may hit 4.65 million tons in October, 4.5 million tons in November and 4.7 million tons in December, he said.

China is the largest soybean importer and it is heavily reliant on the international market, as about 60 percent of the country's edible oil is imported. Imports include extract oil, soybeans and oilseeds.

Stockpiles for soybeans held by the country have also increased significantly in the past two years, Shang said without giving specific figures.

The US Department of Agriculture (USDA) has cut its forecast for this year's grain yields, sparking price hikes both in the futures markets and the spot markets, he said.

Related readings:  Fall in soy futures  Soybean imports set to surge  Corn, soybean up on inclement weather worries  Good harvest is around China this autumn

Soybean prices have risen in the Chicago Board of Trade for a third week and speculation that China will sustain purchases in turn stimulated the price increase, analysts said.

US soybean sales rose 85 percent from a week earlier to 2.02 million tons in the week to Oct 14, with about 72 percent of the sales going to China, USDA figures showed.

Besides soybean oil, a slew of agricultural products including cotton and sugar have joined the recent price fluctuations, partly due to speculation, analysts said.

Driven by the rising food prices, China's consumer price index (CPI), a major gauge of inflation, will continue rising, said Qu Hongbin, HSBC's chief economist in China. But CPI will hit a ceiling by the end of the year before beginning to go down, Qu said.

Food prices account for about 30 percent of China's CPI basket.