Global grease market witnessed a flat price under the background of supply exceeding demands and showed a steady development in the year of 2006. Although the price rose in the fourth quarter of 2006 due to the sharp rise of grain price worldwide, it tended to drop compared to 2005. For the full year of 2006, soybean price fell 3.71% from the year 2005 while the prices of bean oil and rapeseed oil increased by 2.58% and 13.43% over previous year. Overall, supply exceeding demand in global grease market is still the main restriction for market price rise. Noticeably, bean oil price highlighted 2006 grease market and saw a sharp rise, which can be attributed to robust market demands and dramatically decrease of inventory.

Output of Major Oil Crops Worldwide, 2001-2006
 (Unit: million tons)
 

It is estimated that soybean's planting area in China will be 8.9 million hectare in 2007, decreased by 2.2%, or 200,000 hectare over 9.1 million hectare of last year. This is mainly because some field will replant corn. Soybean output in China is expected to reach 15.6 million tons in 2007, increasing by 0.7%, or 100,000 tons from 15.5 million tons of the year earlier. During 2006-2007 periods, newly-increased soybean supply of China is about to stand at 46.4 million tons, of which, home-made soybean supply is 15.5 million tons and imports are 31 million tons.

China's Soybean Output, 1996-2006
(Unit: 10,000 tons)
 

Global soybean price experienced a continuous downturn during 2005-2006 periods, which impacted farmers' returns from soybean planting, so the planting area of soybean in China in 2007 may accordingly decline. As China's economy develops steadily, financial market is placed on increasingly growing pressure. But in 2007, RMB is expected to get appreciated further, so grease enterprises are attracted to arrange a large number of purchases, so soybean crushing sector will keep growing, accordingly, both soybean demands and prices are ready to rise. As for the soybean meal sector, the supply is sufficient. Domestic demands keep growing steadily, but feed industry moves slowly, so the pattern of supply exceeding demand remains unchanged. In bean oil sector, the international raw oil price goes up gradually and tends to be stable after the rise in 2006. Therefore, it sees a limited room for rise except for seasonal demands.

2 Supply and demand of China oil crop market, 2006-2007
2.1 Supply of China oil crop market, 2006-2007
2.2 Demand and consumption of China grease market, 2006-2007
2.2.1 Soybean demand and consumption 
2.2.2 Soybean meal demand and consumption
2.2.3 Bean oil demand and consumption

3 Factors influencing grease price
3.1 Global macro-economy
3.2 International exchange rate market
3.3 Climates of soybean production areas
3.4 Demands of China feed industry
3.5 Influence of Bird Flu on soybean market
3.6 Soybean planting cost analysis
3.7 Roles of futures investment fund market

4 Summary of China grease market, 2006-2007