Being the world’s largest consumer of edible oils—China makes up 20% of global consumption of major vegetable oils, but only 13% of their production, according to US Department of Agriculture figures—the country is highly exposed to international fluctuations in prices and supplies.

Why cooking oil prices are up

Right now, a series of factors are pushing up prices and crimping supplies. Huang Hanquan, director of the pricing department at China’s state economic planning agency, rattled off a list in an interview with Economic Daily: the covid pandemic, Russia-Ukraine war, a drought in South America and Canada, export curbs on Indonesian palm oil, and sky-high shipping costs.

Prices of sunflower oil have shot up 73% to $2,844 per metric ton as of March compared to the average price of $1,639 for the 12 months ended September 2021, according to the US Department of Agriculture. Prices for soybean oil—China’s most-consumed cooking oil—is up 34% versus the 2020/21 average.

Though food prices fell in March compared to a year earlier according to data out today, food inflation is expected to rise in coming months. Factory prices rose 8.3% for the month, more than expected.

Meanwhile, China also wants to reduce its external dependence for soybeans. It currently imports 84% of the soybeans it consumes, but wants to raise its self-sufficiency rate for the oilseed to 20% by 2025. To ramp up domestic production, officials will offer subsidies for land rotation and dole out incentives to counties that produce lots of of cooking oils.

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