China's liberal policy for soybean imports is conveying benefits to Chinese consumers. Falling global prices for soybeans are causing China's cooking oil prices to drop.
Yihai Kerry--a Singapore-owned company that is the leader in China's cooking oil industry--announced that it plans to cut prices on its Arawana-brand vegetable oil products by 10%. This follows similar price cuts over the course of last year that will bring vegetable oil prices down more than 20% from early 2013. A company spokesman attributed the price cut to a decline in the cost of raw materials that is due to falling global prices for soybeans since last year.
Competition ensures that low prices are transmitted to consumers. The second-biggest veg oil-supplier, COFCO, said it also plans to cut the price of its Fulinmen oils about 10%.
Yihai Kerry has sent out a letter to sales agents notifying them of the price cut. It will take four to six weeks for the price cuts to reach retail products.
A reporter checked price quotations from a wholesale market in Beijing and found that a case of four 5-liter bottles of Arawana soybean oil cost 204 yuan in January 2013. The price was down to 173 yuan in December 2013, a decrease of 15%.
In general, Chinese food prices seem to be in deflationary mode. According to National Bureau of Statistics retail food price data for mid-March, sixteen commodities fell in price and eight increased. Several were unchanged. Pork prices fell 2.4% during the first half of March 2014.
In contrast, Chinese officials are preventing corn prices from falling by buying up 60 million metric tons (more than a fourth of the harvest) to support prices, subsidizing marketing of corn, and rejecting imports.