China’s soybean glut drives surge in cooking oil exports to India

As Chinese buyers continue importing huge volumes of soybeans from South America and now the US, domestic demand at home has weakened. This leaves processors with more soybean oil than their slowing economy can absorb. The result: record shipments to India, the world’s biggest buyer of soybean oil.

China exported a record 70,877 tonnes of soybean oil in October, most of it headed to India. In the first 10 months of this year, its exports have already touched 329,000 tonnes. This is almost three times the total for all of last year. With China resuming soybean purchases from the US after a temporary trade truce and ties with India improving, this trade route is only expected to grow.

For India, the imports make economic and logistical sense. Aashish Acharya, vice president at Patanjali Foods Ltd, said Chinese soybean oil matches South American quality. It is cheaper by $10–$15 per tonne. It also takes just 10–12 days to reach India’s east coast, far quicker than the 50–60 days it takes from Brazil or Argentina. Imports from China have already reached about 70,000 tonnes in November and may rise by another 12,000 tonnes. Over the six months through April, China could supply as much as 350,000 tonnes. This would make it India’s third-largest source for the period.

China produces around 20 million tonnes of soybean oil annually. Once consumed, it was almost all used domestically. But with people dining out less and economic activity slowing, consumption has dipped. This has left commercial inventories above 1 million tonnes — a seven-year high for mid-November, according to Mysteel. Crushers are expected to keep running at high capacity, and it may take a while for demand at home to catch up. This means India is likely to see even more Chinese soyoil on its shores in the months ahead.