China’s soybean oil market continues its upward trend, with inventories down 15%.
China’s soybean oil market is supported by higher crude and palm oil prices and pre-festival demand, with inventories down sharply. However, record Brazilian soy output, rising imports (+22.5%), and post-holiday demand softness may increase supply pressure, limiting upside and risking medium-term price declines.
Internationally, the US Environmental Protection Agency’s proposal to increase the biodiesel quota by 2026 and adjust exemption rates led to a rise in global oil prices, which also impacted the domestic market. This, coupled with geopolitical tensions fueling crude oil prices, provided additional support to the oil sector. Meanwhile, rising palm oil prices widened the gap between soybean and palm oil prices, becoming another factor influencing domestic soybean oil prices.
Domestic demand in China has increased due to inventory buildup ahead of the Spring Festival, with some oil mills scheduling deliveries for early February. Commercial inventories have declined by approximately 15% compared to the previous month. Limited rapeseed oil imports, continued inventory drawdowns, and the reverse price differential between soybean and palm oil have shifted market demand toward soybean oil, fueling strong domestic demand. Domestic soybean oil inventories have been steadily declining since the fourth quarter of 2025, with a minimum forecast for March-April 2026.
On the supply side, Brazil’s projected soybean harvest for the 2025/2026 season is expected to reach a record 176-181 million tonnes, easing concerns about a domestic soybean shortage. Although soybean supplies declined in the first quarter, the government made up the shortfall through reserve auctions, selling over 2 million tonnes, with deliveries concentrated between January and April. This suggests that no significant supply shortfall is expected in March and April.
Analysts’ opinions on the market outlook are divided. Some believe the upward trend in the oil sector is continuing, with the focus shifting to Malaysian palm oil inventories at the end of January and production/demand data for February. Others note that as domestic refining volumes recover and demand for soybean oil declines during the Chinese New Year holiday, supply pressure will gradually increase, despite the continued favorable situation in the global oil market and domestic structural support. A third group is cautious, suggesting that soybean oil prices have limited upside potential and may face downward pressure in the medium term.
China’s soybean oil imports increased by 22.5%.
According to customs data, China’s soybean oil import volume from January to December 2025 was 350,000 tons, up 22.5% from a year earlier.
In 2025, China’s total soybean oil imports totaled 350,000 tonnes, up 22.5% year-on-year, indicating a significant increase in supply. This news has a negative impact on spot prices, as increased imports could lead to oversupply in the domestic market, suppressing the downward trend in spot prices. Combined with the recent market trend of soybean oil futures (e.g., the closing price of the main 2605 contract at 8,282 yuan/tonne, the settlement price at 8,310 yuan/tonne, a decline of 42 points), the import data has reinforced expectations of weakening supply, which could increase pressure on futures in the short term and lead to further price declines.
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Source : Ukr Agro Consult
