The edible oil market has become more volatile after wholesalers and millers cut supplies in anticipation of increased prices of the essential cooking ingredient in the wake of the export ban by Indonesia, the world’s biggest supplier of vegetable oil.
Yesterday, the wholesale prices of palm oil rose by Tk 150 per maund overnight to Tk 6,250 at Chattogram’s Khatunganj, one of the largest wholesale markets in Bangladesh, a day after the Southeast Asian nation slapped restrictions on the shipment from its country.
Indonesia announced plans to ban exports of the most widely used vegetable oil on Friday, in a shock move that could further inflame surging global food inflation, reports Reuters.
The halting of shipments of the cooking oil and its raw material, widely used in products ranging from cakes to cosmetics, could raise costs for packaged food producers globally and force governments to choose between using vegetable oils in food or for biofuel.
Indonesia accounts for more than half of the global palm oil supply.
Alternative vegetable oil prices spiked in response to the measure, which will take effect on April 28. Soybean oil, the second most used vegetable oil, rose 4.5 per cent to a record high of 83.21 US cents per pound on the Chicago Board of Trade, reports Reuters.
At Khatunganj, soybean oil was sold at Tk 7,200 per maund in the wholesale market.
In the retail market in Dhaka, prices of loose palm oil stood at Tk 145-Tk 148 per litre yesterday, up from Tk 142-Tk 145 a week ago. Prices of loose soybean declined marginally, according to data compiled by the Trading Corporation of Bangladesh.
Abdul Alim, a wholesaler in Chattogram, said dealers and mill owners cut the supply of the product over the last one month on the news that Indonesia may stop exporting.
At the same time, unscrupulous dealers and brokers are making an extra profit by reducing the supply against demand, he said.
“We are now selling edible oil at the price fixed by the government. However, dealers have not been supplying any oil for the last four days. Dealers say they are not getting oil from millers against demand,” said Monwar Hossain, owner of Yasin General Store in the capital’s Karwan Bazar kitchen market.
Abul Kashem, a wholesaler and retailer in the same market, said they got a small amount of edible oil in the last one week from dealers.
When he inquired about the reasons, the dealers had replied that the supply was low, he told The Daily Star.
Bangladesh imported 21 lakh tonnes of palm and soybean oil in 2021, including around 13.5 lakh tonnes of palm oil.
It buys palm oil from Indonesia and Malaysia. Around 900,000 tonnes of palm was brought in from Indonesia in 2021. In the first three months of 2022, palm oil and soybean oil imports were 10.22 lakh tonnes.
Abul Hashem, general secretary of the Bangladesh Edible oil Wholesalers Association, says there is an acute crisis of edible oil in the market, especially for loose soybean. As a result, prices of loose edible oil increased further in the wholesale market.
Yesterday, a maund (37.32 kg) of soybean oil was selling at Tk 6,600-Tk 6,700 in Moulvibazar, a wholesale hub, up from Tk 6,500-Tk 6,600 a couple of days ago. Palm oil prices also edged up at the wholesale level, he said.
“Besides, the supply of bottled oil is low. People are not getting oil as much as they want,” said Hashem.
Md Shafiul Ather Taslim, director of TK Group’s finance and operations, said his firm did not cut the supply.
“There is no shortage. We are supplying the same amount we usually provide.”
