China’s appetite for vegetable oils has been one of the key factors supporting markets for the commodity over recent years, a new report by Rabobank has found.
The study, titled Finding the Food-Fuel Balance, states that China’s current consumption of 29m tonnes makes it the largest consumer of vegetable oils in the world, accounting for 19% of total consumption.
Due to economic development and changing dietary habits, the country’s consumption has increased by over 15m tonnes over the past decade, and the report forecasts this to continue growing.
Soy oil leading the charge
Over 90% of China’s vegetable oil consumption is for food purposes, with soy oil the most widely used.
“Soy oil currently represents 40% of total Chinese vegetable oil consumption and has been growing at a rate of 7% per year over the last decade,” says the report. “Palm and rapeseed oils each account for another 21% of consumption in China. Palm oil consumption has been growing even faster than soy oil as it is increasingly used in the food processing industry.”
China produces both soybeans and rapeseeds, although production of these is insufficient to meet domestic demand, meaning that China must rely on imports to feed its domestic crushing industry.
Oilseed imports booming
Imports of both soybeans and rapeseeds have been strongly increasing, although rapeseeds started from a much lower base. After peaking in 2009/10, state-sponsored subsidies have appeared to favour grains, such as corn and wheat, relative to rapeseed and other oilseeds. Without a significant change, the report’s authors expect oilseeds to continue to lose acreage to wheat and other crops.
Furthermore, Chinese production of soybeans has stagnated at around 15m tonnes for more than a decade. In this regard, Rabobank expects Chinese production of soybeans to decline moderately, with imports therefore forecast to continue increasing.
Palm oil, the second most important oil in terms of consumption in China, accounts for the lion’s share of vegetable oil imports at 70%. With no domestic production, China imports approximately 6m tonnes of palm oil from Southeast Asia.
Relative to economy
China’s growth in vegetable oil consumption has been strongly linked to its economic performance, says the report. “Over the next five years, consumption growth is expected to slow due to a weaker macroeconomic environment and the high consumption levels already achieved.”
At present, China’s per-capita consumption of vegetable oils is approximately 22 kilogrammes per person, a level on par with some of the more developed Asian nations.