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China's soybean processing industry is grappling with a significant supply-demand imbalance. As of October 30, domestic soybean oil stocks reached 1.5 million tons, a 4.3% increase compared to the same period in 2025 and the highest level recorded since 2024. This surge in inventory has exerted downward pressure on domestic prices, compelling processors to pivot toward international markets to clear excess supply.
While China maintains its position as the world's premier importer of soybeans, consistently increasing volumes from Brazil and the United States to support its refining and livestock sectors, the domestic market is struggling to absorb the output. The resumption of soybean supplies from the U.S., facilitated by a trade truce, has kept processing facilities running at high capacities despite cooling domestic demand.
Economic headwinds and reduced household spending have led to a noticeable accumulation of oil stocks. Experts from COFCO Futures anticipate that processing rates will continue to outstrip sales and consumption in the near term. This trend extends to soybean meal, which also saw inventories reach a two-year high in October.
To mitigate the glut, Chinese processors have aggressively increased their export activity. During the first nine months of 2026, soybean oil exports tripled compared to the previous year, reaching nearly 800,000 tons. The oversupply has also impacted financial markets; soybean oil futures on the Dalian Commodity Exchange dropped by 1% on November 3. Market sentiment was further weighed down by falling crude oil prices linked to potential diplomatic developments between the U.S. and Iran.
Moving forward, the trajectory of the Chinese soybean oil market will hinge on the sustained volume of processing, the recovery of domestic consumer demand, and the industry's ability to maintain high export volumes to global buyers.
Source: Ukrainian Electronic Grain Exchange