Prices slashed on edible oil

The country's major edible oil producers have announced they will cut prices of edible oil by up to 16 percent in May due to a continuous decline of international and domestic oilseed prices, a move analysts said Wednesday is expected to push down inflation in May.

Song Hancong, marketing director of China National Cereals, Oils and Foodstuffs Corp (COFCO), the country's largest State-owned agricultural conglomerate, told the Global Times Wednesday that the company started cutting distribution and wholesale prices of its Fulinmen brand edible oil in the end of April.

"Blend oil and soybean oil will see a price drop of up to 16 percent. The continuous price drop of soybean, the major raw material for edible oil production, has enabled us to surrender parts of our profits to consumers," Song said.

Yihai Kerry Investments Co, the country's leading grain and oil processing company and a wholly owned Chinese subsidiary of Asia's leading agribusiness group, Wilmar International Limited, also announced Tuesday that the company will cut the prices of its Golden Dragon Fish brand edible oil.

The prices of its soybean oil products will be cut by 15 percent and those of blend oil by 8 percent.

Prices of soybean futures on the international markets started dropping in the end of 2012, causing prices of soybean oil futures on the domestic market to fall to 7,300 yuan per ton recently from around 9,000 yuan per ton early this year.

"The prices of soybean futures on the international markets have fallen by 15 percent since September 2012. The drop in cost of raw materials is the main reason behind the ongoing price cut in edible oil in the domestic market," Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant Co, told the Global Times Wednesday.

"The drop in edible oil prices will have a positive impact on the country's consumer price index (CPI) in the second quarter. It will push down the CPI in May by around 0.15 percentage points," Ma said.

China's CPI, a main gauge of inflation, grew 2.1 percent year-on-year in March, down from a 10-month high of 3.2 percent in February. The figure brought the CPI in the first quarter to a 2.4 percent year-on-year increase, less than the annual target of 3.5 percent growth.

Economists expected the second quarter's CPI, especially in May, to rise dramatically due to the effects of the ongoing bird flu outbreak and a massive quake that hit Southwest China's Sichuan Province in late April.

Despite the announcement of the edible oil price cuts, they have yet to be seen at major retailers in Beijing.

A Walmart store in eastern Beijing offered 10 percent discounts on edible oil between April 27 and May 3, but gave the May Day holidays as the only reason.

"Price cuts will be transmitted to the retail end and consumers at the end of May after a few weeks of adjustment," Song from COFCO said.