China’s state-owned stockpiler Sinograin has this week announced its sixth auction of national rapeseed oil reserve this year in a move to cap rising cash prices in the country.
Nearly 16,000 tons of the edible oil reserve will be offered this Thursday from storage facilities in eastern and northwestern China. This offer is significantly larger than that of the previous auction this Monday which only marketed 1,000 tons and achieved no sales.
Demand at previous auctions largely this year disappointed with only 10% out of an offer of 25,000 tons sold at the first round on June 9.
Before the first rapeseed oil auction this year, cash prices in China had already spiked 15% year on year to a record high of 14,370 yuan/ton ($2,151//ton). Since the beginning of 2022, prices have risen more than 8%.
Rising rapeseed oil prices in China have mostly been driven by weak Chinese oilseed output in 2021 and slow imports this year due to strong global inflation. Chinese importers have struggled to source oilseeds such as soybean and rapeseed in 2022 as the cost for imports consistently outpaced domestic prices in China.
Despite a firm cash market, edible oil futures in China have collapsed in the past two weeks led by weak palm oil futures as inventory level in Indonesia spiked due to the recent export ban.
The main rapeseed oil futures contract on Zhengzhou Commodity Exchange (CZCE) slid 8% in the past week to 13,231 yuan/ton ($1,981/ton) on Tuesday.