India rarely imports large quantities of soybean oil from China—this volume has hit a record high.

According to foreign media reports, trade sources revealed that Indian importers have rarely purchased a record 150,000 metric tons of soybean oil from China. This surge stems from an oversupply of domestic soybean oil in China, prompting Chinese oil processors to sell to India at prices lower than those offered by traditional South American suppliers—thereby alleviating inventory pressure. Earlier, China’s soybean imports in May reached a record high, while June imports ranked second-highest on record, boosting soybean crushing volumes. However, domestic demand has slowed, leading to a sharp buildup in inventories of soybean-derived products. Sources indicated that the soybean oil purchased by India will be shipped between September and December, priced $15–20 per ton cheaper than South American supplies. A New Delhi distributor noted that Chinese soybean crushers are grappling with oversupply of both soybean meal and soybean oil, and are exporting soybean oil to India to reduce stockpiles. India typically imports soybean oil primarily from Argentina and Brazil; this time, however, it turned to China due to the price advantage. Another distributor stated that Chinese crushers are offering crude soybean oil at approximately $1,140 per ton (CIF), for shipment in Q4, compared to $1,160 per ton for South American supplies.

Reaching new highs consecutively! Behind the rally in soybean oil—driven by bullish expectations—cash market fundamentals have yet to catch up.

Recently, the DCE soybean oil futures contract for January 2027 (SOY2701) has undergone a sustained upward move, with prices repeatedly hitting new short-term highs. The bullish trend remains strong, investor enthusiasm—and inflows of incremental capital—has intensified, and the pace of price gains has notably accelerated. As futures prices rise rapidly, price action on the futures market has begun to diverge from domestic spot market fundamentals, highlighting a growing tension between robust forward expectations and weak current realities. The sustainability of this rally therefore remains highly uncertain. Image source: AI-generated based on description I. Upstream cost pressures from overseas markets ignite bullish sentiment The core driver behind this rally is weather-related risks threatening the U.S. soybean crop. Data from the ProFarmer Crop Tour indicates declining pod counts year-on-year across multiple major U.S. producing states, and the soybean crop condition rating has slipped to 61%, below prior market expectations. High temperatures and drought conditions are posing tangible threats during the critical pod-filling and seed-setting stages. Markets are thus front-running expectations of reduced new-crop output, pushing CBOT soybean futures—main contract—to hold steady above 1215 cents/bushel, lifting the overall price floor for soybeans globally. As soybeans constitute the primary raw material for soybean oil production, rising import costs provide fundamental bottom support for domestic vegetable oils. Meanwhile, international crude oil prices remain relatively firm, and the U.S. biodiesel blending mandate has been raised—bolstering expectations for industrial soybean oil demand. This energy-driven narrative has attracted speculative capital, and the concurrent strength in rapeseed oil and palm oil—via sector-wide spillover effects—has further propelled soybean oil prices higher. II. Weak domestic spot fundamentals—supply remains ample In the near term, no significant tightening in domestic soybean oil supply has emerged. Latest survey data shows national commercial soybean oil inventories stand at approximately 1.4 million metric tons—up 30,000 tons month-on-month and 70,000 tons year-on-year—placing current stocks at multi-year highs, with inventory accumulation pressure still unresolved. Soybean arrivals are expected to remain at multi-million-ton levels throughout Q3; estimated arrivals for August and September stand at 11 million and 9 million tons, respectively. In Week 32, domestic oil mill soybean crushing volume reached 2.333 million tons, with operating rates at 64.24%, sustaining high soybean oil output and ensuring ample spot supply from coastal mills. On the demand side, edible oil consumption remains in its traditional off-season. Daily average soybean oil transaction volumes at mills stand at only 25,600 tons. End-users—including food processing and foodservice enterprises—are purchasing strictly on a just-in-time, as-needed basis, with no evidence of broad-based proactive restocking. Downstream traders show limited willingness to chase higher prices, exhibiting resistance toward elevated soybean oil valuations. Consequently, spot price gains significantly lag behind futures price increases, widening the futures–spot price spread and resulting in a scenario where futures lead and spot lags. The modest recovery in the physical market offers insufficient momentum to sustain further upside in futures, and this growing divergence between futures and spot markets introduces downside risk for future corrections. III. Rising market participation and mounting risks at elevated levels Technically and from a capital-flow perspective, SOY2701 has advanced steadily along its short-term moving averages, with bullish candles continually establishing new highs and open interest expanding in tandem. Incremental capital continues fueling the rally, keeping short-term bullish sentiment dominant.

China Soybean Oil Stocks Hit Record as Crushing Outpaces Demand

22 hours ago

China's commercial soybean oil stocks hit a record 1.5 million tons as crushing rates exceeded sluggish demand. High inventory levels have boosted export shipments three-fold while futures prices declined on the Dalian Commodity Exchange.

bloomberg

2026-11-02

China Soybean Oil Stocks Hit Record as Crushing Outpaces Demand

China Soybean Oil Stocks Hit Record as Crushing Outpaces Demand

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