According to Futures Daily, domestic commercial inventories of rapeseed oil are currently low, and plant operating rates remain subdued, with production focused primarily on fulfilling existing contracts. The tight spot supply situation persists, keeping basis levels firm. Meanwhile, the initiation of routine stock rotation at reserve facilities in various regions—combined with the need for crushing plants to replenish these reserves—has further exacerbated the scarcity of spot supplies.
"It’s not a question of price; the issue is that we simply cannot find any stock," said Tu Biao, a futures-spot trading assistant at Zhejiang Zheshui International Trade Co., Ltd., describing the domestic rapeseed oil market for July and August. In his view, the defining characteristic of the market during this period is a gradual decline in liquidity: tradable supplies in the Southwest have continued to shrink, and traders are issuing fewer price quotes, causing the basis in the Sichuan-Chongqing region to climb from 400 RMB/tonne to 450 RMB/tonne.
Tu Biao noted that while many end-user enterprises had anticipated an influx of rapeseed oil crushed in Guangxi into the Sichuan market during July and August, plant operating rates fell short of expectations due to issues with rapeseed raw material supplies. The liquidity provided by Guangxi-crushed oil for the 2607 futures contract could not be sustained for the 2609 contract, driving up prices in both production and consumption regions.
Xin Xuan, an agricultural products analyst at Founder Mid-term Futures, stated that since August, domestic rapeseed oil has shown simultaneous strength in both futures and spot markets, leading price gains across the edible oil sector. The futures market structure exhibits a "strong near-term, weak far-term" pattern; the near-month 2609 contract surged to an intraday high of 10,788 RMB/tonne on August 20, posting a cumulative monthly gain of nearly 9%. In the spot market, the basis remains firm, with average prices ranging from 10,640 to 10,980 RMB/tonne. "While the strengthening of ICE rapeseed prices has provided cost support for domestic rapeseed oil, the primary driver behind rapeseed oil leading the gains in the vegetable oil sector is the convergence of tight near-term supply and market news," Xin Xuan told reporters. Currently, domestic commercial inventories of rapeseed oil are low, and crushing plant operating rates remain subdued; production is focused on fulfilling existing contracts, leaving the tight spot supply situation unchanged and keeping the basis strong. Meanwhile, the initiation of routine rapeseed oil rotation at various state reserve facilities—combined with the need for crushing plants to replenish those reserves—has further exacerbated the spot supply crunch, providing short-term support for near-month futures contracts. Additionally, restrictions on the issuance of phytosanitary certificates and tighter inspections at certain Russian plants in early August—Russia being my country's largest direct source of rapeseed oil imports—have fueled market concerns regarding a potential contraction in future imports, further boosting market sentiment.
Tu Biao added that for domestic enterprises, the key focus is on when new liquidity will emerge; potential sources include the release of previously stockpiled rapeseed oil, the resumption of coastal crushing operations, and imports of new-crop Russian rapeseed oil.
Xin Xuan noted that with the supply of readily available stock at crushing plants remaining tight and production rates showing no signs of rapid recovery, the supply-constrained landscape is unlikely to reverse in the short term. However, it is worth noting that downstream buying interest has waned as rapeseed oil prices continue to climb; recent trading activity at crushing plants has been sluggish, with traders showing little inclination to actively restock, preferring instead to purchase only what is needed for immediate use. As rapeseed oil futures prices continue to rise, the risk of market volatility is also intensifying.
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