China’s Evolving Oils & Fats Landscape: Positioning Malaysian Palm Oil for Growth
China’s edible oil market has begun to show signs of shifting dynamics, illustrated by the steady rise in its soybean oil export volumes. According to China Customs data, the country’s soybean oil exports have risen from 125,000 tonnes in 2023 to 126,000 tonnes in 2024, and further to 139,000 tonnes in just the first half of 2025—already exceeding full-year volumes recorded in the previous two years.
Exports of “other soybean oil and fractions” dominated shipments in the first half of 2025, accounting for 121,000 tonnes, while crude soybean oil contributed 18,000 tonnes. Notably, India has emerged as a significant new buyer, importing approximately 150,000 tonnes in 2025 alone.
Inside China’s Soybean Oil Advantage
China now leads global soybean oil production, holding nearly one-third of the world’s crushing capacity—equivalent to around 190 million tonnes annually. Major crushers have improved cost efficiency through smart plant upgrades, industrial clustering, and enhanced value recovery from by-products such as soybean meal and lecithin.
These structural advantages, combined with the “duty-free processing with imported materials” policy, have significantly boosted export competitiveness. Logistics further strengthen this edge: shipping routes to India take only 14–21 days compared with 45–60 days from South America.
At the same time, the domestic feed is transforming China’s soybean utilisation patterns. Leading livestock and poultry enterprises have successfully reduced soybean meal inclusion in feed formulations from about 15% in earlier years to just 7% today. This strategic adjustment has reduced dependence on imported soybeans and in turn, moderated domestic crushing demand.
Market Outlook: Balancing Gains and Risks
While rising soybean oil exports are helping to relieve China’s inventory pressure, several uncertainties persist. Export activity through September and October may help crushers manage high stocks, while a sustained export pace could lead to firmer domestic prices from November onwards.
However, the broader supply outlook remains abundant. Substantial soybean imports continue to feed high crushing volumes, keeping inventories elevated. Unless exports to India remain strong and sustained, downward pressure on the domestic market may continue.
Policy Shockwaves in China’s Rapeseed Market
Rapeseed—China’s second-largest feedstock for vegetable oil—has entered a volatile phase. On 12 August, 2025, the Ministry of Commerce imposed a preliminary anti-dumping duty of 75.8% on rapeseed products from Canada, effective immediately.
The policy shift triggered a pronounced “supply substitution” effect. Since June 2025, China’s import composition has shifted towards reduced rapeseed imports but higher rapeseed oil imports.
• 2024: China imported 6.39 million tonnes of rapeseed, of which Canada supplied 96% (6.13 million tonnes).
• January–September 2025: Imports totalled 2.45 million tonnes, down 1.79 million tonnes year-on-year (–42.2%).
• September 2025: Monthly imports fell sharply to 115,270 tonnes, down 53.23% month-on-month and 85.71% year-on-year.
Conversely, rapeseed oil imports surged—reaching 156,600 tonnes in September 2025, up 13.83% month-on-month and 6.97% year-on-year. Cumulatively, from January to September 2025, rapeseed oil imports reached 1.6 million tonnes, up 22.2% year-on-year.
In response, COFCO Group swiftly secured 50,000 tonnes of new-season rapeseed from Australia. However, Australia’s limited production capacity raises concerns over whether it can sufficiently offset the shortfall left by Canada.
Malaysia’s Strategic Opportunity: Strengthening Palm Oil’s Role in China’s Market Shift
China’s edible oil landscape is clearly evolving. Two simultaneous shifts—the diversion of soybean oil for export and a tightening rapeseed supply chain—are creating new opportunities for Malaysian palm oil.
Between September and October, China’s soybean oil exports may help ease crusher inventories. From November onwards, potential price firming could influence the soybean–palm oil price spread. The overall market impact will depend largely on the continuity and volume of exports, particularly toward India.
The recent surge in soybean oil exports has been driven by favourable crushing margins, abundant soybean arrivals, and short-term duty-free export policies. Meanwhile, seasonal demand recovery and holiday stockpiling for the Mid-Autumn and National Day festivals are further supporting domestic consumption.
For Malaysia, however, relative pricing remains the decisive factor. In China’s highly price-sensitive market, the soybean–palm oil spread will continue to determine competitiveness. As long as palm oil maintains a meaningful discount to soybean oil, it will retain a strong foothold across both industrial and consumer applications—positioning Malaysian palm oil as a key beneficiary of China’s shifting oils and fats dynamics.
Chinese Soybean Oil Stocks (tonnes)
Figure 6: Chinese soybean oil stocks (www.epansun.com, 2025).