The edible oil market has become more volatile after wholesalers and millers cut supplies in anticipation of higher prices for the essential cooking ingredient following Indonesia’s export ban, the world’s largest supplier of vegetable oil.
Palm oil wholesale prices rose by Tk 150 per maund overnight to Tk 6,250 at Chattogram’s Khatunganj, one of Bangladesh’s biggest wholesale markets, a day after the nation of Southeast Asia has imposed restrictions on shipments from his country.
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Indonesia on Friday announced plans to ban exports of the most widely used vegetable oil, in a shock move that could further aggravate soaring global food inflation, Reuters reports.
Halting shipments of cooking oil and its raw material, widely used in products ranging from cakes to cosmetics, could increase costs for packaged food producers around the world and force governments to choose between use of vegetable oils in food or for biofuels.
Indonesia accounts for more than half of the world’s palm oil supply.
Prices for alternative vegetable oils rose in response to the measure, which will come into effect on April 28. Soybean oil, the second most widely used vegetable oil, rose 4.5% to a record high of 83.21 US cents a pound at the Chicago Board of Trade, Reuters reports.
In Khatunganj, soybean oil was sold at 7,200 taka per maund in the wholesale market.
In the retail market in Dhaka, bulk palm oil prices were between 145 and 148 taka per liter yesterday, compared to 142 and 145 taka a week ago. Bulk soybean prices fell slightly, according to data compiled by the Trading Corporation of Bangladesh.
Abdul Alim, a wholesaler in Chattogram, said dealers and factory owners had cut off supplies of the product over the past month on news that Indonesia might stop exporting.
At the same time, unscrupulous dealers and brokers make extra profit by reducing supply relative to demand, he said.
“We are now selling edible oil at the price set by the government. However, dealers have not supplied oil for the past 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 he had obtained a small amount of edible oil in the past week from dealers.
When asked about the reasons, dealers had said supply was low, he told the Daily Star.
Bangladesh imported 21 lakh tons of palm and soybean oil in 2021, including about 13.5 lakh tons of palm oil.
It buys palm oil from Indonesia and Malaysia. About 900,000 tons of palms were imported from Indonesia in 2021. In the first three months of 2022, imports of palm oil and soybean oil amounted to 10.22 lakh tons.
Abul Hashem, secretary general of Bangladesh Edible Oil Wholesalers Association, said there was an acute crisis of edible oil in the market, especially for bulk soybeans. As a result, bulk edible oil prices have further increased in the wholesale market.
A maund (37.32kg) of soybean oil was selling for Tk6,600-6,700 at Moulvibazar, a wholesale center, yesterday, compared to Tk6,500-6,600 a few days ago. Palm oil prices also rose slightly at the wholesale level, he said.
“Also, the supply of bottled oil is low. People don’t get as much oil as they want,” Hashem said.
Md Shafiul Ather Taslim, finance and operations director of TK Group, said his company did not cut off the supply.
“There is no shortage. We supply the same quantity as we usually supply.”