Demand for vegetable oil in China, the biggest consumer, has slowed amid a traditionally peak period ahead of the Chinese Lunar New Year on concern a weakening economy may damp consumption.
“We are not seeing high demand in the normally high demand season,” said Cao Huimin, an analyst at China Cereals & Oils Business Net. “The outside markets are weighed by the European debt crisis, the domestic economy isn’t good either, and the global oilseed market is looking bearish,” she said. The Lunar New Year, beginning Jan. 23, usually spurs gift purchases and stocking of cooking oil by restaurants.
China’s economic growth slowed to 9.1 percent in the third quarter, the least in two years, after the government tightened lending and expanded property-market curbs. Imports of soybeans in the first 11 months this year fell 4.4 percent from a year ago, according to customs data. The country is also the world’s biggest importer of soybeans.
“The market has been quiet and sales are slack,” Leon Xia, analyst at Shanghai JC Intelligence Co., said by phone from Shanghai. “Increased supply is adding pressure and we haven’t seen that surge of demand, which normally precedes Lunar New Year,” he said. Imports of soybeans last month jumped 50 percent over October to a 17-month high, according to customs data.
Spot prices of crude soybean oil in Dalian, a key indicator for northern China, have dropped 8.7 percent since Sept. 30 to 8,550 yuan ($1,342) a metric ton yesterday, the lowest in more than a year, according to data by Shanghai JC.
“End-user demand continues to be weak,” the China National Grain & Oils Information Center said in a daily market report. “The market is having a hard time gaining confidence.”
China’s food-consumption of vegetable oils is over 27 million tons per year, including 10.9 million tons of soybean oil, according to a report by the grain center dated Nov. 14. In the year that started Oct. 1, its soybean oil imports may rise 6.1 percent to 1.4 million tons, the U.S. Department of Agriculture said Dec. 9.
Soybeans for January delivery on the Chicago Board of Trade were little changed at $11.1825 a bushel at 5:42 p.m. Futures have lost 18 percent in the last six months on rising global output.