Wang Yuanyuan

    A HOUSEWIFE was surprised to find the price of several brands of cooking oil had risen by at least 20 percent since last month at a Vanguard Supermarket in Luohu District on Friday.

    “A 5-liter bottle of Orchid brand peanut oil was now 101 yuan (US$16), 15 yuan more than one I bought last month,” Chi Xiaofan said.

    Chi also found that a 5-liter bottle of Arawana brand blended oil now costs 64.9 yuan, about 10 yuan more than before.

    Nearly all the brands of edible oil had increased by 10 to 20 yuan this week.

    “Most edible oil producers increased their prices last Monday by 10 to 20 percent, some had even increased by about 25 percent,” said Wu Lili, a manager at Carrefour Supermarket in Futian District.

    Although packaged oil had just increased price this week, prices for bulk oil had increased by 30 percent since July because of a sharp increase in the price of imported soybeans.

    “At the beginning of July, a ton of bulk soybean oil was about 7,200 yuan. It rose to 9,300 in mid-October and is still increasing,” said Lin Shaoru, a sales manager at the Buji Farm Produce Wholesale Market in Luohu District.

    Reason for the price rise

    Lin said that the price rise followed sharp increases in the prices of commodities such as soybeans and peanuts. The average price of imported soybeans had increased by about 18 percent since July.

    However, factors such as price rises in food on international markets, inflation, speculation and a high degree of dependency on imported materials for oil could all result in a price rise for edible oil, said Zhou Siran, a food industry researcher at Zhongtou Consultation and Research Co. Ltd.

    Domestically produced oil could not meet market demand, so 65 percent of the commodities for oil were imported from overseas. “So, with price increases for edible oil on the international market, the oil producers had to increase their prices to stay in business,” he said.

    Meanwhile, bad weather in many areas had resulted in a sharp increase in food price. The prices of many crops this year, such as wheat, soybean and corn, had all increased.

    “China has a high dependency on imported soybean and 80 percent of the imported soybean comes from America. Disastrous weather, such as the La Nina effect and a drought, had many investors turning negative about the production volume of soybean in the American market. They expected that a decrease in production could lead to price hike in the near future, which could further lead to a price rise for edible oil,” Zhou said.

    The sharp rise in the price of bulk oil could be attributed to speculation. “In recent years, many investors were not certain of the market and economy, so large sums of invested capital went into agricultural products,” he said.

    Little influence

    For many edible oil giants, such as Arawana, Orchid and Fulinmen, they were not worried about a negative impact on sales after price rises.

    “Edible oil is [one of] life’s necessities for Chinese families and the [price rise] was not just one company. It would have some influence, but that influence would not be very serious,” said Mu Feng, a professor at the Economics Department at Shenzhen University.

    “Some consumers might choose to buy rapeseed oil because it was relatively cheaper in the beginning, but the new prices would gradually be accepted,” he said.

    Meanwhile, there would be little effect on the giants’ market share. “Arawana and Fulinmen account for more than 50 percent of the edible oil market. Sales of edible oil for each company would not be seriously affected,” Mu said.

    Cooling measures

    The Central Government has been selling 300,000 tons of stored edible oil held to help keep prices down since Oct. 20. It is the largest volume of stored edible oil placed on the market this year. On Oct. 20, the government sold about 299,000 tons of rapeseed oil in Anhui Province for 9,181 yuan per ton.

    “Although this won’t change the price hike, it has given faith to the market so prices won’t keep increasing sharply like garlic and ginger. The government took action very quickly this time. It was like telling the speculators not to even think about oil,” Zhou said.

    However, some people thought that controlling the price of oil was not enough. “If the prices for soybean and bulk oil are still going up, companies have to keep increasing prices to keep the business going. The government still has millions of tons of stored soybeans, so it would be better if they sold those beans to the market,” Lin said.