China’s soybean oil market continues upward trend: stocks decreased by 15%

Internationally, the US Environmental Protection Agency’s proposal to increase the biodiesel quota by 2026 and adjust exemption rates led to a rise in global oil prices, which also impacted the domestic market. This, coupled with geopolitical tensions fueling crude oil prices, provided additional support to the oil sector. Meanwhile, rising palm oil prices widened the spread between soybean and palm oil prices, adding another factor to domestic soybean oil prices.

Domestic demand in China increased due to inventory buildup ahead of the Spring Festival, with some oil mills scheduling deliveries for early February. Commercial inventories decreased by approximately 15% compared to the previous month. Limited rapeseed oil imports, continued inventory drawdowns, and the reverse spread between soybean and palm oil prices shifted market demand toward soybean oil, fueling strong domestic demand. Domestic soybean oil inventories have been steadily declining since the fourth quarter of 2025, with a minimum forecast for March-April 2026.

On the supply side, Brazil’s projected soybean harvest for the 2025/2026 season is projected to reach a record 176-181 million tonnes, easing concerns about a domestic soybean shortage. Although soybean supplies declined in the first quarter, the government made up the shortfall through reserve auctions, selling over 2 million tonnes, with deliveries concentrated between January and April. This suggests that no significant supply shortfall is expected in March-April.

Analysts’ opinions on the market outlook are divided. Some analysts believe the upward trend in the oil sector is continuing, with focus shifting to Malaysian palm oil inventories at the end of January and production/demand data for February. Others note that as domestic processing volumes recover and demand for soybean oil declines during the Lunar New Year holiday, supply pressure will gradually increase, despite continued favorable conditions in the global oil market and domestic structural support. A third group takes a cautious stance, suggesting that soybean oil prices have limited upside potential and may face downward pressure in the medium term.

China’s soybean oil imports increased by 22.5%

According to customs data, China’s soybean oil imports from January to December 2025 totaled 350,000 tons, up 22.5% from the previous year.

In 2025, China’s total soybean oil imports totaled 350,000 tons, up 22.5% from the previous year, indicating a significant supply increase. This news has a negative impact on spot prices, as increased imports could lead to oversupply in the domestic market, suppressing the downward trend in spot prices. Combined with the recent market trend in soybean oil futures (e.g., the main 2605 contract closed at 8,282 yuan/tonne, with the settlement price at 8,310 yuan/tonne, a decline of 42 points), the import data has heightened expectations of weaker supply, which could increase pressure on futures in the short term and lead to further price declines.

Tags: China, soybean oil