The price rises started in July and are now peaking as the beginning of winter raises demand for vegetable protein. Chinese consumers cook more oily foods in winter than in summer months.
Yesterday's average wholesale price for soybean oil was CNY7570 per metric ton, according to China's Food Association, increasing by 1.5 per cent since a week ago and at its highest in two years. Rapeseed oil now costs CNY7600 per metric ton.
Analysts say the rising soyoil price is mainly due to the rising price of imported oil.
"Now is the harvest time for soybeans and America has a very large crop, so the price should have gone down. However, due to the price increase in corn and wheat, soybean is getting more expensive as well," Zhang Liwei from the National Grain & Oils Information Centre, told the People's Daily.
With wheat at its highest price in 10 years, and strong demand for corn ethanol also pushing up corn prices, global soybean prices are strong. The higher global prices are being compounded by low domestic stocks in China. Domestic suppliers have sold much of their inventory during October's mid-autumn festival.
At the same time, wet weather conditions have reduced China's rapeseed crop to 12.2 million tons, down by about 850,000 tons on the 2005 crop. In addition, higher prices for rapeseed oil on the international market are enticing Chinese producers to export oil, tightening supply to the domestic market.
Exports of rapeseed oil in the first three quarters reached 111 thousand metric tons, increasing by 14 times the previous year's figures, while imports were half that of last year at 4027 metric tons, according to statistics from the ministry of agriculture.
"With growing demand for biofuels mainly made of soybean oil, rapeseed oil and palm oil, the edible oil price is not likely to drop very drastically in the future," warned Zhang.
Oil companies have begun passing the higher costs onto consumers, raising prices by up to 8 per cent. Rapeseed oil has increased by about 18 per cent on last month's price to CNY4.00 per 500g and blended oil has increased to CNY45.5 for a 5-litre bottle, up by 25 per cent. Additional reporting by Pan Yan.
