Edible oil prices in Bangladesh have been rising for a month. Palm and soybean oil prices have gone up by Tk 10-15 per litre due to a price spike in the international market.
Loose palm oil was being sold at Tk 90 per kg and soybean oil at Tk 100 per kg in the capital's Karwan Bazar kitchen market on Tuesday. Bottled oil retailed at Tk 105 per litre.
The price of a drum of soybean oil increased to Tk 18,000 from Tk 17,400 on Monday, Jasim Uddin, a trader at Karwan Bazar, told bdnews24.com. A drum contains 204 litres of soybean oil.
The wholesale price of soybean oil is still around Tk 3,550 per maund, while the asking price at the mill gate is Tk 3,700. It is also taking 2-3 days to receive the oil supply order, said Abul Hashem, an edible oil wholesaler in Old Dhaka’s Moulvibazar.
Currently, the wholesale price of soybean oil is Tk 88.75 per kg, according to Hashem. However, the mill owners are demanding Tk 92.5 per kg. Transportation costs and profits will also be added to this price.
Traders believe the country's market will return to its previous state only after the international market stabilises. The oil refining and marketing companies have promised the government not to increase the prices anymore for the time being. Loose soybean oil will be sold at Tk 90 per litre and palm oil at Tk 80 per litre at the mill gate, the companies said.
REASONS BEHIND THE INSTABILITY
Market participants believe soybean oil prices are rising due to declining stocks in major exporting countries. On the other hand, the prices of Indonesia and Malaysia palm oil are rising due to increasing soybean oil prices.
“The rising prices in the international market has had an effect on the local market. Due to conflicts with the US, China has moved away from the US market and is buying large quantities of soybean oil from the Latin American markets. They are even rumoured to have booked 50 percent of the international market,” said Mostafa Haider, the president of the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association.
The prices have also risen due to soybean stocks declining and droughts delaying new plantings in Brazil and Argentina. Although Brazil is selling goods at slightly higher prices, the traders in Argentina are not currently focusing on exports.
“The market is very volatile due to these reasons. Local traders have promised the government to control the prices as much as possible to keep the supply flowing. The prices may further rise in the future. However, if China moves away from its import policy, prices could return to normal again,” said Mostafa.
According to a report by the US Department of Agriculture, soybean stocks in the world this season are much lower than forecast.
The edible oil market will continue with upward trend until the first quarter of 2021 due to the rise in soybean oil prices, said Thomas Mielke, CEO of Global Oil, in a recent online seminar.
However, the market could stabilise again if it starts raining in Brazil, Argentina eases soybean exports, and China move away from its massive import strategies, he said.
Market analysts believe the production of oilseed sunflower and rapeseed around the world has also fallen short of expectations due to dry weather.
MARKET CONDITIONS
International market analysis showed that soybean oil prices reached $799 per tonne at the end of last year. It gradually began to decrease in the new year. The prices dropped to $578 in March of this year. The local market remained stable as it continued to fluctuate slightly through the rest of the year.
The international price of soybean oil is currently $759 per tonne, up from $690 in August.
In Bangladesh, the price of soybean oil has gone up Tk 2.5-5 in three months, considering $1 equals Tk 85.
If the price of soybean oil is within $760 per tonne at the time of shipping, its price should be no more than Tk 90 per litre in the local wholesale market, said the Bangladesh Tariff Commission.
According to TCB's daily retail market report, the price of loose soybean oil in the retail market was between Tk 82-86 per litre for most of the year. The price of palm oil was also between Tk 65-70 per litre. Edible oil prices began to rise steadily from the last week of September.
Retail soybean oil is being sold at Tk 97-100 per litre now. Palm oil is going for Tk 85-90 per litre. Soybean oil prices have risen by 16 per cent and palm oil by 32 per cent year-on-year in October.