Government officials in China, the largest user of cooking oils, told suppliers to keep wholesale prices for packaged products stable to avoid stoking inflation, according to two people familiar with this week’s talks.
They asked not to be identified because they aren’t authorized to speak publicly. Officials at the office of foreign media affairs at the National Development and Reform Commission declined to comment when contacted by phone and asked for a written request for an interview. A faxed letter requesting an interview wasn’t immediately answered.
Soybean futures traded in Chicago reached a record $16.915 a bushel on July 23 as the U.S. endured its worst drought in a half century. China is the world’s largest soybean importer and second-biggest for palm oil. Containing cooking-oil prices may hurt crush margins for producers including Wilmar International Ltd. (WIL) and Cofco Corp. and limit imports of soybeans and palm oil, said Tommy Xiao, analyst at Shanghai JC Intelligence Co.
“This will add pressure to crushing and refining businesses already suffering from negative margins,” said Xiao by telephone from Shanghai. “It’ll probably be bearish” for the global oilseed market, he said. While soybeans in Chicago surged 32 percent this year, soybean meal in Dalian increased 28 percent and oil rose 4.2 percent.
“The government has advised that companies should avoid increasing prices unless it is absolutely necessary,” said an e-mail from Wilmar in Singapore. ’’There is no control on cooking oil prices.’’ Yin Jianhao, a spokesman at Beijing-based Cofco, didn’t answer two calls to his mobile phone.
Soybean and palm are the two top sources of cooking oils consumed in China, according to the China National Grain & Oils Information Center. Consumer prices gained 2.2 percent in June, the slowest pace in more than two years.
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