October 1, 2008

The imports of edible oil slowed in China in the first eight months of the year due to shrinking foreign supply.

 The General Administration of Customs (GAC) said on Tuesday that China imported 5.39 million tonnes of edible oil between January and August this year, up 4.7 percent year on year, but 18.9 percentage points lower than the 23.6 percent increase in the same period last year.

Edible oil imports peaked at 900,500 tonnes in April, but sharply fell to 508,000 tonnes in June, the smallest monthly amount since the beginning of 2007.

The volume rebounded in July with 730,000 tonnes of imports, but fell back again to 580,000 tonnes in August.

The slowing imports were mainly blamed on shrinking soy supply from Argentina, China's biggest soy supplier, the customs said.

Preferential policy on soy imports, namely the extension of lower duties to Sept 30, also lessened the need for soyoil imports, according to the customs.

China slashed import duty on soy from three percent to one percent last year to reduce local soy prices amid soaring inflation. 

GAC said in an analytical report that China relied too much on foreign exports of edible oil, so was prone to the risks of international price volatility. The report suggested government incentives would stabilize domestic soy planting. The government should also introduce high-yield soy breeds to lessen dependence on foreign supply.

In addition, the government can also support business expansion of local soy enterprises to break the monopoly held by international grain companies, the report said.

China's edible oil imports has soared more than 200 times from the 1986 level. Before 1995, China had been a net exporter of soy. But it became a net importer in the five years thereafter.