Wheat, flour prices unlikely to be tamed soon

 In view of the unprecedented increase in the price of wheat worldwide, it is unlikely that the price of wheat and wheat flour will come down soon in the local market.

In Chaktai-Khatunganj, the country’s largest consumer product market, wheat and flour prices have started rising since last week.

On Monday the selling price went up by Tk 6 to Tk 7 per kg more than that in the last week.

The price of flour has gone up by Tk 200 to Tk 250 per 50-kg sack in more than a week.

Meanwhile, according to a report of Reuters, wheat hits 14-year highs as Russia-Ukraine conflict curbs supply. Chicago wheat futures rose by more than 6 per cent on Monday to 14-year highs on concern global supplies will be disrupted until the Russia-Ukraine conflict is resolved.

Russia and Ukraine together account for about 29 per cent of global wheat exports, as well as 19 per cent of corn exports. Since Russia launched the campaign it calls a “special military operation” on February 24, commodity markets have surged.

According to Ministry of Agriculture, the demand for wheat in Bangladesh is about seven million metric tonnes per year.  

According to the data of Chattogram port, 54 lakh 55 thousand metric tonnes of wheat were imported through the port in the last financial year, of which around 40 per cent came from Russia and Ukraine. Of this, 4 lakh 8 thousand metric tonnes have been imported by the Food Department.

The price of wheat increased to $ 1,192, a near 14-year high, as the Russian invasion of Ukraine caused supply disruptions from two of the world’s largest producers.

Referring to the international suppliers, wheat importers said the price of Indian wheat was around $ 370 per metric tonne on Monday and the Canadian wheat was priced at $ 535 per metric tonne.

A top wheat importer BSM Group Chairman Abul Bashar Chowdhury said the import of wheat from India is an alternative to that of Ukraine and Russia.

Wheat imports from India have been on the rise over the past one year due to the rising wheat prices in Ukraine, he added. As Russia and Ukraine, the third-largest global wheat suppliers, are at war, global wheat buyers are turning to the Indian market.

Last month, the import price of Indian wheat was $ 220 to $ 250 per metric tonne while now it stands at $ 360 to $ 370.

Traders in Chaktai-Khatunganj, the country’s largest consumer goods market, said the wheat market has become so volatile that small and middle-class traders no longer want to be in it.

The owners of small mills that used to buy wheat from big importers and produced flour are going through hard times.

Abu Syed Chowdhury, owner of JC Food factory, a flour mill in Chaktai area of Chattogram, said last to last week he produced less than 20 metric tonnes of flour per day, but over the past week, his factory production came down by 75 per cent.

“The wheat market is becoming very volatile. For this reason, we have stopped producing flour by collecting enough wheat,” he pointed out.

However, traders say the wheat and flour markets have been receiving shock from the beginning of the Russia-Ukraine war.

The TCB (Trading Corporation of Bangladesh) source said the price of flour was rising in the market even before the start of Russia-Ukraine war. 

In the list of market prices, flour was found to be selling at Tk 34 to Tk 36 per kg, 13 per cent higher than that a year ago and packaged flour sells at Tk 40 to Tk 45 per kg. 

Mohammad Nasir Uddin, deputy general manager, Meghna Group, a leading consumer product marketing company in the country said, they are selling wheat and flour at the earlier price set two weeks ago.

“We have not yet adjusted the price of the product with the current world market price,” he said, adding that however, wheat which was being currently imported would be sold at a higher price.

The wheat market rose over 40 per cent last week, its biggest weekly rise on record, and on Monday hit its highest since March 2008 at $12.60-1/4 a bushel. Chicago Board of Trade most-active wheat rose 6.6 per cent to $12.53-1/4 a bushel at 0927 GMT.

Corn on Monday rose 2.7 per cent to $7.75-1/4 a bushel, soybeans rose 2.1 per cent to $16.95-1/2 a bushel. Corn and soybeans are around their highest since September 2012.

“Until the fighting in Ukraine ends, it cannot be expected that wheat and corn exports from Ukraine and Russia will resume,” one European trader said on condition of anonymity.

Russia and Ukraine also provide 80 per cent of the world’s exports of sunflower oil, which competes with soyoil.

Ukrainian ports remain closed and dealers are reluctant to trade Russian wheat after Western sanctions, so buyers are seeking alternative suppliers.

Export demand for European Union wheat surged last week and is expected to continue to rise.

“With such a sudden run on other sources, there is worry that some countries will introduce export restrictions to stop their own domestic supplies being sucked away,” another trader said, but added some big importers were still willing to buy for fear prices will rise further.

Bulgaria’s government said it will expand wheat reserves, while producers fear an export ban.

Already, Hungary has banned all grain exports with immediate effect because of the price increases.

Major wheat importer Algeria on Sunday issued an international tender to buy milling wheat.