Soybean oil prices in China fall due to high inventories and weak demand

Soybean oil prices in China fell 2.39% in September amid high inventories and weaker-than-expected demand.

According to SunSirs, the average market price of soybean oil fell from 9,216 yuan/t, or $1,375/t, at the beginning of the month to 8,996 yuan/t, or $1,342/t, as of September 30.

 

The main factor putting pressure on the Chinese soybean oil market remains high supply. In September, soybean arrivals remained significant, with weekly processing at oil extraction plants at 2.15-2.25 million tonnes.

High rates of soybean processing supported significant soybean oil production and prevented inventories from declining significantly.

 

Commercial soybean oil stocks in China were estimated at 1.49-1.51 million tonnes at the end of September, slightly higher than last year and one of the highest this year.

The increase in exports partially absorbed the excess supply, but this was not enough to significantly reduce soybean oil stocks.

 

At the same time, the traditional seasonal increase in demand in the fall turned out to be weaker than expected.

On the eve of the Mid-Autumn Festival and National Day, food companies and traders purchased vegetable oils mainly for current needs and avoided building up large inventories due to high prices.

 

Additional pressure on soybean oil prices is created by competition with palm oil, the supply of which on the world market also remains high.

 

After the holiday season, SunSirs expects further weakening demand for vegetable oils in China amid ample supply.

According to analysts' forecasts, soybean oil prices in China may remain in the range of 8,800–9,000 yuan/t in the near future.

 

High soybean oil stocks and stable soybean processing rates may continue to restrain the recovery of quotations and increase competition in the global vegetable oil market.