China becomes a supplier of soybean oil

China is cementing its status as the world’s largest buyer of soybeans and quietly reshaping the trade in oilseed products, Bloomberg reports.

The Asian country is ramping up soybean oil exports as rising global demand for biodiesel makes the product attractive enough to export overseas. China is also testing for the first time shipments of soybean meal from Argentina, a replacement for traditional imports of the beans and their domestic processing into animal feed.

Both changes, though small in volume, mark a departure from long-standing trade flows. They also provide room for the country to continue reducing its need for U.S. soybeans if the trade war between Beijing and Washington continues.

China exported at least 127,000 tonnes of soybean oil in the first half of the year, more than it would in all of 2024, customs data show. The shipments are going to countries such as South Korea, Malaysia and India, where demand for the edible oil remains strong.

The trend “reflects a global rebalancing of supply and demand in the vegetable oil market,” analysts at Guotai Junan Futures Co. said in a note. “The rise in exports is driven by China’s need for soybean meal, while other countries need soybean oil.”

The global soybean oil market continues to be supported by strong demand for biofuels in the U.S., where about half of domestic production is used to make renewable diesel. At the same time, domestic biofuel blending requirements and less competitive prices in South American countries like Brazil and Argentina are limiting additional supply.

Domestically, China is struggling with the opposite problem: oversupply. Commercial soybean oil inventories have surged 70% since May to 1.12 million tonnes, according to Shanghai-based consultancy Mysteel. Chinese crushers are pushing crushing rates to ensure they have enough soybean meal to feed livestock, creating an unusual arbitrage opportunity to export surplus oil from a country better known for importing it.

For meal, China is exploring a new supply channel from Argentina. Bunge Global SA recently sold at least two shipments of the high-protein feed ingredient to Chinese buyers.

Earlier, China reportedly began selling soybean oil to India at a $20 discount compared to Brazilian goods. Shipments from China win on price and time: Shipments from South America take more than six weeks to reach India, while shipments from China take two to three weeks to reach their destination.

Tags: China, soybean oil