August 21, 2008

Tootoo.Com Looks at Causes of Reduced Cooking Oil Prices in China

BEIJING, Aug. 21 /Xinhua-PRNewswire/ -- today releases its thoughts on the decreasing price of cooking oil in China. believes the fall of cooking oil prices is caused by the decreasing international oil prices. The yield decrease of soy in the USA, Brazil and Argentina is caused by bad weather, which also decreased the export of soy, so the price of soy ( ) in the international market increased sharply last year. However, the weather in the three main soy exporting countries has improved since July this year, which is good for the growing of soy, meaning the price of oil futures falls back because of the increased supply of soy.

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Argentina, as one of the main soybean producing countries, recently attempted to introduce a new policy on the export tax of soybean, which caused farmers to organize large-scale demonstrations at the beginning of this year. The government had to abolish the disputed export tax of soybean due to the protests, which also contributed to the falling international soybean prices. On the other hand, it's simply not that economical to use corn or soybean to make energy because of the falling oil prices. This causes the export of most corn and soybeans ( ) and also increases the supply of soybean on the international market.

At present, the trade price of various kinds of oil is falling in China, such as bean oil, palm oil, oil futures and cooking oil. According to the price quotation of bean oil and rapeseed oil in Jiangsu Province, the price falls compared to the price of July. The price of bean oil falls from 16,000 Yuan per ton to 9,000 Yuan per ton from March to August.

Agriculture information in ( ) demonstrates that trans-national corporations take about 80% of the soybean imports, so the national price of soybean oil changes with the international price. Take the Nanjing market for example, soybean oil accounts for 80% of the cooking oil market, while we can also say the price is determined by foreign influences.

Chinese corporations have no complete right on the oil price due to the excess dependence on imported soybeans. What makes people puzzled is why the corporations don't use Chinese soybeans instead of the imported soybeans, when China is also a main producer of soybean.

"The cost is too expensive, we should pay more than twenty or thirty Yuan for every 50 kilos," said a manager of an oil company. The low price of imported soybeans is caused by the high export subsidies in the USA. The export subsidies reached about 19 billion last year. China abolished the agriculture tax and unveiled the subsidy policy. Data from the ministry of agriculture shows that the national output of soybean is about 14.5 million tons while the imported soybean reached about 32 million tons in 2007. The import volume takes about 68.8% of the demand quantity, so the international price determined the national price of oil.

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