Home ›› 24 Aug 2022 ›› Front
Despite the fall in prices of commodities like edible oil and flour in the international market, their prices still remain high in local wholesale and retail markets.
In some cases, the prices are still on a raising trend.
The price of non-bottled soybean oil in the country rose twice to a record Tk 185 per litre in the span of a month while the price of crude soybean oil in the global market was $1,936 per tonne. After three months, even as the price of soybean oil in the global market fell by 26 per cent to below $1,430, loose soybean oil is still being sold at Tk 182 per litre in the local market.
Similarly, in March, as the price of wheat in the global market went up to $1,294 per bushel, the price of flour per kg in the local market increased by 30 per cent to Tk 50 per kg. The price fell by 40 per cent to $775 per bushel in the global market, but loose flour price remains unchanged at Tk 50 in the country. Asked about the issue, the Consumers Association of Bangladesh (CAB) President Golam Rahman blamed the business culture of the country.
“When the price increases in the global market, they (businessmen) increase the price in the local market. But when the price decreases in the global market, they keep the price unchanged on various excuses,” he said.
The recent rise in the value of dollar against taka has also contributed to the situation, the CAB president told The Business Post.
“While it is a fact that all import costs have gone up due to the rise in dollar value, but even if dollar value goes down, I don’t think the price of commodities would decrease immediately,” he added.
Local traders blame dollar price hike
As the scenario in the local markets in Bangladesh does not reflect the global situation, importers and marketing companies shift the blame elsewhere. They say that despite the decrease in the prices in the international market, they are unable to reap the benefit due to the dollar crisis and the increase in its value.
TK Group Director (Brand and Finance) Shafiul Athar Taslim told The Business Post that in this competitive market, usually when the prices fall in the global market, the prices also fall in the local market because traders sell off their products before they face a loss. However, the current scenario is different, he claimed.
“Commodity prices in the global market have fallen by as much as 15 per cent but the value of dollar has risen by 35 per cent. As a result, we importers are not getting the benefit of the price reduction in the global market,” he said.
“Edible oil is still arriving at our port and it is bought at $1,800 per tonne even though the price is now $1450-1500 per tonne in the global market,” he said, adding that the situation is the same for all the imported commodities.
On the other hand, he said that the value of dollar going up from Tk 86 to Tk 115 is also leaving an impact on the situation.
“The market will calm down at its own pace when the discounted goods reach the country and the value of dollar stabilises,” Taslim said.
While talking to The Business Post, some traders also said that merely lowering the value of dollar would be sufficient to lower commodity prices in the local market, as many traders were busy opening LCs to import commodities at the reduced price by clearing the stock commodities they imported at a higher price.
Global market reigned
According to the Food and Agriculture Organization (FAO), prices of almost all food products including edible oil, wheat, corn, milk and meat have been on a downward trend in the world market for the past two to three months.
The Food Price Index (FPI), an indicator of global food prices, fell 8.6 per cent from June to July. It fell by 2.3 per cent from May to June.
According to the FAO price index, prices of major food grains fell by an average of 11.5 per cent in July. Most significantly, the wheat price decreased by 14.5 per cent. The agency claimed wheat prices fell more in response to a grain deal between Russia and Ukraine and a bountiful harvest in the northern hemisphere.
The edible oil prices in the global market have stabilised due to ample exports from Indonesia, the largest producer of palm oil. According to statistics, the price of edible oil fell by 19.2 per cent, the lowest level in the past 10 months due to the fall in the price of crude fuel oil in the global market as well as the decrease in demand for sunflower oil.
Meanwhile, due to the contraction of demand and the increase in supply from the two main producers and exporters, Brazil and India, the price of sugar in the international market fell by 3.8 per cent this month. The price of sugar is now at its lowest level in the last five months.
Besides, the prices of dairy products and meat have also decreased in the global market. The prices of these two commodities have decreased by 2.5 per cent and 0.5 per cent respectively.
