Peanut oil prices rose for 8 consecutive days between July 3-10 in China
Leading Chinese peanut oil suppliers have been successively raising prices. Market observers are concerned about price hikes for soybean oil as well as international soybean price hikes, which will be forced up by scorching weather and long dry spells in the United States that will lower soybean yields.
Peanut oil is an expensive, upscale oil for Chinese consumers. It accounts for 10% of all edible oil products consumed in the country.
Prices started climbing in April and have been growing steadily. The price of pure peanut oil went up for eight consecutive days from July 3-10, in total undergoing a 9% rise from April 5, according to the price monitoring system for agricultural products run by the state-run Xinhua news agency.
The prices for lower-cost blended peanut oils have also grown. One of the leading suppliers of the products just increased its prices by 10%, the second price hike this year. Industry and securities analysts interviewed by the Dongfang (Oriental) Daily blame the price increase of oil on peanuts.
The price of peanuts has increased to 12 yuan (US$1.88) per kilogram from 8 to 9 yuan (US$1.25-$1.40) last year. The rise was caused mainly by wider market anticipation for price hikes as many farmers have been holding out for better prices.
The peanut prices will remain firm in the short term, according to the analysts and will soften only after the new harvest hits the market.
The prices of soybean oil, the popular cooking oil for China's public, has now also come under increasing pressure. Their fluctuations have generally followed an upward trend this year. The current prices show marked increases from the fourth quarter of last year, says Guo Qingbao, chief editor of the cooking oil industry information website cnyouzhi.com (meaning "Chinese edible oil") based in Zhengzhou, the capital of central Henan province.
Futures prices for more popular soy oil products have now increased to more than 10,000 yuan (US$1,569) per metric ton, up from the levels of 9,100 yuan (US$1,427) and 9,200 yuan (US$1,533) last year.
An edible oil supplier in Shanghai said his company's soybean grinding division has been operating with financial losses since early this year.
Guo and most of other analysts believe it will be difficult for soy oil prices to reverse the upward trend because of the widely expected hot spells in the US that will affect soybean production.
China ranks as one of the world's major soybean producers, with production mainly in the northern provinces of the nation, but it still relies on imports to cover 70% of its demand.
US government agencies monitoring weather conditions reported that record high temperatures have hit the US eastern and midwest regions during the first six months of the year, even resulting in some deaths among American people.
The long hot weather and possible reductions in soybean yields production will give suppliers and traders on the major world commodity markets the excuse to raise soybean prices and affect the soy oil prices in China, said the analysts.
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