Agri Biz
Despite significant drops in global markets, palm oil prices are still high
The price of palm oil has dropped drastically by at least Tk3,500 per maund in the international market in the beyond four months, but the commodity is still selling at a higher rate in the domestic market.
Although the booking price is decreasing every day, it has remained static in the domestic market for the past three weeks, having eased by only Tk1,500, according to brokers.
In Malaysia, the world’s largest palm oil producer, it is currently selling at RM3,690 per tonne, which was RM7,500 in May. As such, market data shows the booking rate has almost halved in the last four months.
Adding the costs of transportation and refining to the international booking rate, the average price in the country stands at Tk3,800 currently, said shippers and brokers.
But it is selling for Tk4,800 at the mill level and for Tk5,500 at the wholesale level. That means importers are making an extra profit of Tk1,000 per maund (40.90 liters) of palm oil.
When Indonesia announced a ban on palm oil exports on 28 April, the edible oil market in Bangladesh became unstable immediately and the price jumped by up to Tk800 per maund within just two days.
On the day of the announcement, palm oil was selling for Tk6,200 at Chattogram’s Khatunganj, one of the country’s largest wholesale hubs for household essentials but the price jumped to Tk7,000 on 1 May.
Consumers complain that as soon as the price of edible oil goes up in the international market, importers and traders increase the price in the domestic market without any delay. But when the global price drops, it does not make any effect on the local market even for a few months. In this way, consumers are constantly getting washouts.
Advocate Akhtar Kabir Chowdhury, president of the Chattogram Chapter of Transparency International Bangladesh, alleged when the price goes up in the world market, importing companies put pressure on the government regulatory agencies to adjust prices at the wholesale and retail levels.
“The pump oil price has dropped in the global market for the last four months, but the price has not decreased to that extent in the domestic market. The companies are robbing the rights of the consumers by making an additional profit of Tk1,000 on each maund of edible oil,” he added.
Pradeep Karan, deputy general manager of Citigroup, an edible oil importer and edible oil packaging company, said the demand for the product in the wholesale market has decreased slightly due to the drop in the prices in the global market.
“Products that are currently available in the market were bought at higher prices earlier. As a result, even though the demand has dropped, importers are unable to reduce the price,” he added.
Pradeep Karan claimed that the price at which the product is being sold is lower than the price set by the government.
Analyzing the international market, it has been found that the price of edible oil is decreasing almost every day in the international market. In just ten days, the booking price of palm oil per tonne has fallen by more than RM600, which has decreased by RM3,800 in the last four months.
According to mpoc.org.my data, on 8 September crude palm oil was booked at RM3,690 per tonne in the international market. On 24 August, the booking price was RM4,308. Accordingly, the booking price has decreased by RM618 in ten days.
Traders said after selling at record prices in March-April, the edible oil market has started to ease slowly. Now the price is decreasing every day. But the price has not decreased much in the domestic market.
Mahbubul Alam, president of the Chattogram Chamber of Commerce and Industries, said after an increase, the price of any product, including edible oil, returns to stability gradually. This is the norm of the market.
He said importers should also reduce the price of the product due to the decrease in the global market and in this case, the regulatory authorities have the most important role to play.
“Regulatory agencies should carefully adjust the prices in the domestic market with the international market. Because, the current price drop in the world market can also put importers at great risk,” he added.
Adviser to the Ministries of Finance and Commerce, Dr. Salehuddin Ahmed, emphasized today that the prices of commodities are closely linked to production and supply, and assured that the government is fully aware of the necessary steps to control these prices.
“We are very conscious of issues related to trade and commerce. My colleague, Dr. Wahiduddin Mahmud, who oversees the Ministry of Planning, is also focused on these matters. We are accustomed to handling such challenges,” Dr. Salehuddin remarked in response to reporters’ questions at the Ministry of Finance in Bangladesh Secretariat.
Earlier in the day, Dr. Salehuddin met with Edimon Ginting, the Country Director of the Asian Development Bank (ADB), at his office in the Economic Relations Division (ERD).
He noted that the government is also attentive to the impacts of imported inflation, stressing that only essential goods should be imported. “We must ensure that the additional burden on the general population is minimized and work to further reduce existing pressures,” he added.
Dr. Salehuddin also mentioned that the central bank governor is well-informed about the causes of rising inflation, which is why strict market monitoring is in place.
Addressing another question, he mentioned that the Bangladesh Bank Governor is actively managing the issue of increasing foreign currency reserves, and this topic will be raised in the upcoming annual meetings of the World Bank and the IMF.
When asked about the outcomes of his meeting with the ADB, Dr. Salehuddin expressed that development partners, particularly the World Bank and ADB, remain positive about continuing their operations in Bangladesh. He noted that the ADB and other partners have assured him of their ongoing cooperation in the development sector.
He further highlighted that the development partners are eager to advance pipeline projects in alignment with the government’s priorities.
Regarding the possibility of delaying Bangladesh’s graduation from Least Developed Country (LDC) status beyond 2026, Dr. Salehuddin acknowledged the complexity of the issue, noting that it involves various conditions and the involvement of multiple agencies, including the Ministry of Finance, Ministry of Commerce, and the National Board of Revenue (NBR). He assured that the government is closely monitoring the developments.
When asked about the demands from government employees for ration provisions, Dr. Salehuddin stated that both public and private sector employees are equally important, emphasizing the government’s priority to ensure that everyone can lead a decent life. “We are committed to ensuring that everyone benefits equally,” he said.
On his new responsibilities with the Ministry of Commerce, Dr. Salehuddin underscored the importance of local and international trade as key pillars of the economy. He assured that the government would strive to create a business-friendly and corruption-free environment in all business operations.
Recognizing the significant role of trade, commerce, and the supply chain in curbing inflation, Dr. Salehuddin promised prompt government action to address these issues.
He also mentioned plans to meet with the Ministry of Commerce and its subordinate bodies to tackle pressing matters. “You can be assured that I will do my utmost and take necessary steps swiftly,” he concluded.
The prices of daily essentials will come down gradually, Finance and Planning Adviser Dr Salehuddin Ahmed said today (14 August).
“Common people will get relief to some extent. But it can’t be said that the prices will decrease overnight,” he told reporters at the conference room of the Finance Ministry.
Responding to a question about syndicate in the market, he said, “There is nothing that has not come to our notice, I have some ideas, the governor also knows about it.
“The secretaries here are also very experienced and I told them that you will tell me everything without fear.”
Asked if any step will be taken regarding corruption, he said, “There was no discussion on the issue today.”
Responding to another question he said, “Action against corruption is an ongoing process, some processes need to be followed to punish someone. Some measures and action have already been taken.”
Responding to a question about the specific instructions given today, the finance adviser said the Industries and Agriculture ministries will do whatever needs to be done in the field of production, such as fertiliser supply and market management.
Cyclone Remal has inflicted severe damage on crops across 45,590 hectares of land in the Khulna agricultural zone, causing losses worth Tk 180.24 crore, as reported by the Directorate of Agricultural Extension (DAE) in Khulna.
According to Mohon Kumar Ghosh, Additional Director of the DAE Khulna Zone, 44,148.95 hectares of farmland suffered partial damage, while 1,450.90 hectares were completely destroyed in the four affected districts: Khulna, Bagerhat, Satkhira, and Narail.
In Khulna district, Cyclone Remal affected 3,565.65 hectares of cropland belonging to 13,796 farmers, resulting in losses estimated at Tk 42.98 crore. Bagerhat district witnessed damage to 12,611.50 hectares of cropland from 39,465 farmers, with losses amounting to Tk 97.36 crore. In Satkhira, 659.7 hectares of cropland owned by 12,156 farmers were affected, incurring losses of Tk 24.42 crore. Narail saw damage to 28,763 hectares of cropland from 8,620 farmers, with estimated losses of Tk 15.47 crore.
Speaking to BSS, Mohon Kumar Ghosh highlighted the extensive damage caused by Cyclone Remal to the southern coastal areas, particularly croplands. The affected crops include jute, Aush seedbed, aush cultivated land, groundnut, chili, bona Aman, ginger, turmeric, summer melon, litchi, mango, papaya, betel nut, sugarcane, banana, winter maize, sesame, and various Kharif season vegetables such as tomato, mung bean, and banana.
Following directives from Prime Minister Sheikh Hasina, efforts are being made to support the affected farmers. “We are working tirelessly to help the helpless farmers recover their losses,” Ghosh said, adding that the government is providing incentives and regular counseling and supervision at the field level to aid recovery.
In the coming months, the affected farmers will continue to receive various forms of government support to mitigate the impact of Cyclone Remal.
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