China: July peanut oil prices up 20% Y/Y

Watch Video

Play Video

Those who like to cook with peanut oil might now consider switching to sesame oil or olive oil instead. In July, China’s annual consumer inflation fell to a 30-month low of less than 2 percent, with food prices up by only 2.4 percent. But one item which bucked the trend was peanut cooking oil, which saw its price jumping.

The gold-colored, mild tasting liquid made from peanuts. here in China, one five-litre barrel of peanut oil like this used to cost no more than 120 Yuan in January....but seven months later, after two revisions by major producers, it has risen to over 140 Yuan. On a yearly basis, the peanut oil prices rose by 20 percent in July.

A comsumer said,"If the peanut oil prices keep rising in the long-run, it’s going to be really expensive. I think the peanut oil price level has gone too high."

An industry association talked to cooking oil producers to find out what triggered the surge. The answer received suggests that the overall supply chain contributed to the higher prices.

Wang Xingguo, VC of oil processing on Chinese Cereals&Oils Assoc, said,"The costs of growing peanuts and the transportation have increased, which triggered the price rise of peanut oil."

Sun Mengquan, general manager of Shandong Luhua Group, said,"The market demand is increasing by 20 to 30 percent every year. Our productivity can’t keep up with it."

Du Zubo, vice-general manager of production center, Shandong Luhua Group, said,"In the first half of the year, we spent 26 percent more on buying peanuts than last year."

The more expensive peanuts are from here. This market may look simple, but it is China’s biggest peanut trading center. Shrinking global demand has pushed the dealers’ peanut inventories higher, as most of them used to be exported. To decrease their inventories, dealers are selling them to oil extractors. But dealers say, to make up for the losses from exports as much as possible, they ask for higher prices of their peanuts, 1000 yuan more every tonne compared to last year.

Sun Mengquan, general manager of Shandong Luhua Group, said,"The peanuts are expensive, but we have to accept the reality and buy them. If we don’t have enough extraction material, we don’t produce enough oil products to put onto the market, then we may lose market share."

Chinese housewives may feel more pressure, as the peanut oil is not the only oil getting more and more expensive. Global soybean prices are also surging. leading also to much higher prices of soy bean oil, which is THE most common cooking oil in Chinese kitchens.