Soybean sees Tk10 drop per litre as ginger, sugar, wheat in short supply

The price of soybean oil dropped Tk10 a litre in the local market even though the price fell 47% in the international market over the past year. 

After the seventh meeting of the high-level task force for controlling commodity prices at the commerce ministry on Sunday, the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association announced the price drop to bring some relief to average consumers who are struggling with soaring prices of commodities for a year.

Effective immediately, bottled soybean oil will be now sold at Tk189 per litre and non-bottled soybean oil at Tk167 per litre. At the same time, the price of palm oil has been reduced by Tk2 to Tk133 per litre at the retail level.

But, bringing relief to consumers will be difficult as volatility in ginger, sugar and wheat markets remains high due to a supply crunch, according to a report presented at the meeting on the current supply situation of consumer goods.

According to the commerce ministry report, considering the demand for 11 months of the fiscal 2022-23, the sugar supply is facing a deficit of 72,000 tonnes, ginger 77,000 tonnes and wheat 24,11,000 tonnes. Prices of these essential items are high in the market.

The prices of all commodity items, except sugar and ginger, are declining in the international market. But Bangladesh is not able to take advantage of the situation due to the strong dollar.

Tapan Kanti Ghosh, senior secretary to the Ministry of Commerce, presided over the meeting.

Tapan Kanti said further reductions in the price of edible oil are under review. There is a shortage in ginger supply and efforts are underway to resolve the issue.

Wheat import has decreased by 24 lakh tonnes and sugar import by 72,000 tonnes within a year, which has created an impact on the market, he said.

The annual demand for sugar is about 20 lakh tonnes, but lower imports due to the dollar crisis have created a supply shortfall.

The government recently hiked the prices of loose and packaged sugar by Tk16 to Tk120 and Tk125, respectively. But the sugar market still remains volatile. 

Loose sugar is being sold at Tk130-140 in Dhaka markets. Packaged sugar is unavailable not only in the retail market but also in the super shops.

The same goes for the wheat market. Since the Russia-Ukraine war began, the import of wheat has stopped. Imports from India, the main source of wheat, have also stopped after the neighbouring country halted export to ensure its own food security. 

A major supply shortage of wheat has developed. Due to this, the price of wheat flour (loose and packaged) in the market is now 13-25% higher than in the same period last year.

The Ministry of Commerce says the production of ginger in the country is much less than the demand. That is why the market is dependent on imports, mostly from China. But exports from China have been stopped for more than a month. More than 80% of the current ginger imports are now coming from Myanmar, which is not enough to cover the deficit.

According to the ministry, the price of ginger has soared by 222% compared to the same period last year. As there is no big supplier like China, the price of the product is increasing in the international market too. The price of ginger per tonne has increased by 172% in a span of one year.

Though around 65% of ginger demand can be met from local production, due to lack of proper storage, the product is getting wasted, resulting in a supply shortage during the lean period.

According to the observation of the Ministry of Commerce, the authorised dealer (AD) banks are not providing the required dollars for imports on time. The cost of imports is increasing due to the 100% LC margin.

The ministry also observed that the Trading Corporation of Bangladesh (TCB) should play a bigger role in the commodity market, saying the products procured by TCB are not making any positive impact on the total stock of the country as the products are procured and sold from internal sources.

Consumer goods importers claimed that the cost of imported goods is increasing due to the demurrage charges of the ships as importers cannot discharge goods on time. Due to the non-discharge of goods quickly, the supply chain of goods in the market is being interrupted. 

Even though the prices of some essential commodities have fallen in the international market, the customs authorities are not charging them accordingly, and the prices are being charged higher than the invoice price, importers alleged.