China has a tremendous demand for soybeans and that has pushed futures prices steadily higher in recent weeks. Although the Chicago Board of Trade has lead Chinese vegetable oil prices higher in the past, since the first of the year cash prices seem to be the major factor in rising futures.
The reduction of import taxes on soybeans and soybean products by China's Ministry of Finance last October from 3% to 1% has been extended until the end of September, 2008. Chinese Vice Commerce Minister Wei Jianguo says, "We will encourage the import of agricultural products that are in great need, including soyoil."
The market's excitement about large Chinese vegetable oil imports is due in part to thoughts that China's 2007 rapeseed crop was much smaller than reported, worries that a late-January winter storm severely damaged the 2008 rapeseed crop, and ideas that the Olympics will be a source of additional edible oil demand.