June 6, 2012

China's rapeseed oil prices surge much higher than soyoil

China's rapeseed oil prices are now RMB1,600-2,000/tonne (US$251-$314) higher than soyoil prices, far higher than the price gap of less than RMB800/tonne (US$126) in the past years, the Shanghai Securities News reported on Tuesday (Jun 6).

As rapeseed oil accounts for less than 30% of domestic edible oil consumption, such a wide price spread will likely affect the cooking oil sales. Industry insiders predict that rapeseed oil prices will narrow the gap with soyoil prices over the following period.

However, some views hold that the nation's stockpiling policy may underpin spot rapeseed oil prices at above RMB10,000/tonne (US$1,570.78).

Currently, new rapeseed purchases have already started in some regions, with prices at RMB5,000-5,200/tonne (US$785-$816), 8-13% higher than last year's floor purchase prices of RMB4,600/tonne (US$723).

Rapeseed planting has a smaller profit margin compared with wheat and other grain crops, which has led to shrinking planting area and rising prices in recent years. Now farmers still have high expectations for new rapeseed prices.

The September rapeseed oil contract traded on the Zhengzhou Commodity Exchange stand at around RMB10,300/tonne (US$1,617), nearly RMB1,400/tonne (US$220) higher than the September soyoil contract on the Dalian Commodity Exchange.