Oil Situation and Outlook

Total Oils

Due to increased crush volume using imported soybeans and rapeseed, total vegetable oil production for MY15/16 is forecast at 24.66 million tons, up 723,000 tons from the MY14/15 estimate. Soybean oil will continue to be the primary vegetable oil, accounting for 58 percent of total oil production, followed by rapeseed oil (27.3 percent), peanut oil (11.5 percent), and cottonseed oil (5.3 percent) in MY15/16.

MY15/16 total oil supply is forecast at 37.1 million tons with total domestic consumption of oil for food-use forecast to grow 2 percent from MY14/15 to 30.8 million tons. Domestic consumption of oil for industrial use is expected to stay stable and forecast at 2.3 million tons. MY15/16 total oil imports are forecast at 8.68 million tons, almost unchanged from the previous year. Due to increased supply and price advantage, palm oil continues to dominate vegetable oil imports and is forecast at 5.9 million tons in MY15/16. In general, as the domestic crush sector needs to import oilseeds, imports of soybean oil and rapeseed oil are not expected to lead imports but only to make up supply differences when prices for imported oil become competitive. Taking into account the strong forecast for imports of soybeans and rapeseed, in MY15/16, imports of both soybean oil and rapeseed oil are forecast to hold steady at 1 million tons, respectively.

China's high GDP growth (yearly average at almost 7.6 percent in the last three years and forecast at 7 percent in 2015) and growing consumer affluence is forecast to increase vegetable oil demand by more than 622,000 tons in MY 15/16 to meet food and industrial consumption. Although China's oil consumption has grown rapidly in recent years, there is still significant growth potential before it reaches a level similar to comparable markets like Taiwan. The MY15/16 forecast per capita consumption of vegetable oil for food use of 22.7 Kg (based on total population of 1,360.7 million as of 2013) is still lower than the estimated Taiwan's 2012 per capita consumption of 23 kg.

There is a steady upward trend for the annual per capita consumption of edible oil for rural residents and a slightly slowing trend in urban residents. Industry sources stipulate that these trends could reflect urbanites' increased preference for dining-out and lower preference to consume oil in response to health concerns. Although the 2014 China Statistical Yearbook is no longer separating statistics series for "per capita consumption of vegetable oils by rural and urban resident", it did show the 2013 total per capita consumption for vegetable oil as 12 Kg. The general growing consumption trend remained in 2013 and 2014 with potential for higher intake from China's 629.61 million people living in rural areas.

China's catering industry revenue grew significantly in 2014, up 9.7 percent over the previous year. The urban residents' per capita expenditure for restaurant meals continued to show rapid growth in 2012, reaching an average of $209 (compared to $182 in the previous year). Shanghai residents had the highest level of expenditures ($412) with the lowest in Heilongjiang ($150). The still high Chinese GDP is expected to augment a growing middle class with higher disposable income to spend dinning out. (Note: The 2014 China Statistical Yearbook is no longer tracking "Per capita expenditures on dinning out", thus the 2013 data is not available).

Vegetable oil consumption is also driven by the food processing industry. For instance, the instant noodle industry, which uses large amounts of palm oil, produced more than 10.3 million tons in 2013, up 5.3 percent over the previous year, according to an industry estimate. Instant noodle production went down slightly (down 1.65 percent) to 4.8 million tons in first half of 2014, but total production for 2014 will be similar to the previous year.

The wholesale price for major oils declined sharply from January to December 2014. Both Soybean oil and palm oil prices fell by 16 percent and 14 percent, respectively. However, in 2014 the price difference between palm oil and soy oil (Grade1) decreased to an average 11 percent from the 23 percent in the previous year, signaling an advantage for soybean oil to gain market share.

Taxes & Duties. Oils (Jan 01-Dec 31, 2015)

HS Code

Description

M.F.N.(%)

Gen (%)

VAT Rate %

ED Rate %

Oil

15071000

Crude soybean oil

9

190

13

15079000

Other soybean oil

9

190

13

15081000

Crude peanut oil

10

100

13

15089000

Other peanut oil

10

100

13

15091000

Olive Oil, virgin

10

30

13

15099000

Olive oil, other

10

30

17

15111000

Palm oil, crude

9

60

13

15119010

Palm oil, liquid

9

60

13

15119020

Stearin

8

60

13

15119090

Palm oil, other

9

60

17

15121100

Crude sunflower seed oil

9

160

13

15121900

Other sunflower seed oil

9

160

17

15122100

Crude cottonseed oil

10

70

13

15122900

Other cottonseed oil

10

70

17

15131100

Crude coconut oil

9

40

13

15131900

Other coconut oil

9

40

13

15132100

Crude palm kernel oil

9

40

13

15132900

Other palm kernel oil

9

40

17

15141100

Crude low erucic acid rape or colza oil

9

170

13

15141900

Other crude low erucic acid rape oil

9

170

13

15149110

Crude rape or colza oil

9

170

13

15149190

Crude mustard oil

9

170

13

15149900

Other rape oil

9

170

17

Note: VAT – Value Added Tax Rate; ED – Export Drawback Rate

PSD Table

Country

China, Peoples Republic of

Commodity

Total Oils (1000 tons)

2013/14

2014/15

2015/16

USDA Official

Post Estimate New

USDA Official

Post Estimate New

USDA Official

Post Estimate New

Market Year Begin

10/2013

10/2014

10/2015

Crush

107,730

107,634

111,930

110,416

0

114,000

Extr. Rate, 999.9999

0

Beginning Stocks

3,617

3,062

3,826

3,758

0

3,530

Production

23,627

23,587

24,269

23,940

0

24,663

MY Imports

8,573

8,573

9,420

8,670

0

8,680

MY Imp. from U.S.

186

186

150

150

0

120

MY Imp. from the EC

0

0

0

0

0

0

TOTAL SUPPLY

35,817

35,777

37,515

36,368

0

37,134

MY Exports

114

116

103

82

0

85

MY Exp. to the EC

0

0

0

0

0

0

Industrial Dom. Cons.

2,150

2,150

2,250

2,250

0

2,270

Food Use Dom. Cons.

29,727

29,753

31,153

30,245

0

30,847

Feed Waste Dom. Cons.

0

0

0

0

0

0

TOTAL Dom. Consumption

31,877

31,903

33,403

32,495

0

33,117

Ending Stocks

3,826

3,758

4,001

3,791

0

3,932

TOTAL DISTRIBUTION

35,817

35,777

37,507

36,368

0

37,134

Calendar Year Imports

9,395

7,961

9,705

8,770

0

8,980

Calendar Year Imp. U.S.

150

186

150

150

0

120

Calendar Year Exports

110

105

103

108

0

88

Calendar Year Exp. to U.S.

0

0

0

0

0

0

PSD Table

Country

China, Peoples Republic of

Commodity

Oil, Rapeseed (1000 tons)

2013/14

2014/15

2015/16

USDA Official

Post Estimate New

USDA Official

Post Estimate New

USDA Official

Post Estimate New

Market Year Begin

10/2013

10/2014

10/2015

Crush

18,500

18,500

17,850

18,000

0

18,150

Extr. Rate, 999.9999

0

0

0.356

0.356

0

0

Beginning Stocks

2,157

2,157

2,607

2,539

2,537

Production

6,579

6,586

6,355

6,408

0

6,461

MY Imports

902

902

1,400

1,000

0

1,000

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

9,638

9,645

10,362

9,947

0

9,998

MY Exports

6

6

10

10

0

10

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom. Cons.

7,025

7,100

7,655

7,400

0

7,550

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

7,025

7,100

7,655

7,400

0

7,550

Ending Stocks

2,607

2,539

2,689

2,537

0

2,438

Total Distribution

9,638

9,645

10,354

9,947

0

9,998

CY Imports

1,300

810

1,200

1,000

0

1,000

CY Imp. from U.S.

0

0

0

0

0

0

CY Exports

6

0

0

6

0

6

CY Exp. to U.S.

0

0

0

0

0

0

PSD Table

Country

China, Peoples Republic of

Commodity

Oil, Peanut (1000 tons)

2013/14

2014/15

2015/16

USDA Official

Post Estimate New

USDA Official

Post Estimate New

USDA Official

Post Estimate New

Market Year Begin

10/2013

10/2014

10/2015

Crush

8,710

8,710

8,700

8,530

0

8,670

Extr. Rate, 999.9999

0

0.3138

0

0.3138

0

0.3138

Beginning Stocks

0

0

0

0

0

0

Production

2,725

2,733

2,720

2,677

0

2,721

MY Imports

74

74

70

70

0

80

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

2,799

2,807

2,790

2,747

0

2,801

MY Exports

10

10

10

9

0

12

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom. Cons.

2,789

2,797

2,780

2,738

0

2,789

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

2,789

2,797

2,780

2,738

0

2,789

Ending Stocks

0

0

0

0

0

0

Total Distribution

2,799

2,807

2,790

2,747

0

2,801

CY Imports

55

94

55

70

0

80

CY Imp. from U.S.

0

0

0

0

0

0

CY Exports

10

10

10

9

0

9

CY Exp. to U.S.

0

0

0

0

0

0

PSD Table

Country

China, Peoples Republic of

Commodity

Oil, Cottonseed (1000 tons)

2013/14

2014/15

2015/16

USDA Official

Post Estimate New

USDA Official

Post Estimate New

USDA Official

Post Estimate New

Market Year Begin

10/2013

10/2014

10/2015

Crush

10,300

10,231

9,600

9,657

0

8,900

Extr. Rate, 999.9999

0

0.1419

0

0.1419

0

0.1419

Beginning Stocks

0

0

0

0

0

0

Production

1,498

1,452

1,396

1,370

0

1,263

MY Imports

0

0

0

0

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

1,498

1,452

1,396

1,370

0

1,263

MY Exports

2

2

2

3

0

3

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom. Cons.

1,496

1,450

1,394

1,367

0

1,260

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

1,496

1,450

1,394

1,367

0

1,260

Ending Stocks

0

0

0

0

0

0

Total Distribution

1,498

1,452

1,396

1,370

0

1,263

CY Imports

0

0

0

0

0

0

CY Imp. from U.S.

0

0

0

0

0

0

CY Exports

3

2

3

3

0

3

CY Exp. to U.S.

0

0

0

0

0

0

PSD Table

Country

China, Peoples Republic of

Commodity

Oil, Sunflower Seed (1000 tons)

2013/14

2014/15

2015/16

USDA Official

Post Estimate New

USDA Official

Post Estimate New

USDA Official

Post Estimate New

Market Year Begin

10/2013

10/2014

10/2015

Crush

1,370

1,343

1,280

1,229

0

1,280

Extr. Rate, 999.9999

0

0.358

0

0.358

0

0.358

Beginning Stocks

0

0

0

0

0

0

Production

490

481

455

440

0

458

MY Imports

531

531

500

500

0

550

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

1,021

1,012

955

940

0

1,008

MY Exports

0

2

0

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom. Cons.

1,021

1,010

955

940

0

1,008

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

1,021

1,010

955

940

0

1,008

Ending Stocks

0

0

0

0

0

0

Total Distribution

1,021

1,012

955

940

0

1,008

CY Imports

400

455

500

500

0

550

CY Imp. from U.S.

0

0

0

0

0

0

CY Exports

0

2

0

0

0

0

CY Exp. to U.S.

0

0

0

0

0

0