Wholesale prices of crude palm oil have dropped sharply in both the international and local wholesale markets in recent weeks, but retail consumers in Bangladesh are yet to see any relief as government fixed prices remain unrevised.
Wholesalers and traders at Khatunganj in Chattogram, the country’s one of the largest wholesale commodity markets, said demand for palm oil typically slackens at this time of the year and prices drift downwards.
According to the market data, a month ago a maund (37.32 kilograms) of palm oil was selling at Tk 6,100 on the wholesale market.
Over the period, the wholesale rate has fallen by more than Tk 400 per maund, including a decline of about Tk 200 in the past two weeks, with traders reporting that on Thursday (Novemver 27) palm oil was traded at Tk 5,770 per maund.
However, as the governmentfixed retail rate remains high, the drop in wholesale prices is not impacting the retail market.
The governmentfixed retail price of loose palm oil currently stands at Tk 150 per litre, which is about Tk 6,200 per maund.
Bangladesh Wholesale Edible Oil Traders Association president Md Golam Mawla said that the current mechanism for fixing edible oil prices in the country had become ineffective.
It had been decided that the commerce ministry would review the market every month and reset prices accordingly.
He said that when global prices fall, importers are unwilling to reduce their selling prices, but when global prices rise, they press for quick upward revisions while the government often delays.
According to the data from the Chicago Board of Trade and other futures markets, the demand for palm oil usually weakens at the onset of winter, both in Bangladesh and in major consuming countries such as China.
Between August and October this year, booking prices for crude palm oil were relatively stable, but they turned downward in November.
In August, the booking price for crude palm oil was about $1,026 per tonne, rising slightly to $1,037 in September and averaging around $1,045 in October.
After October, the international market started to decline. The price dropped to $972 per tonne on November 4 and $953 on November 12, before rebounding to $1,006 on November 13 and then easing again to $960 on November 24 and $980 on November 28.
This drop in global prices has also pulled down Bangladesh’s wholesale market price of palm oil in the last few weeks.
Golam Mawla said that if palm oil prices were not revised on time, traders faced some losses when global prices rose.
But when price updates are delayed again and again, or the fixed rates cannot be properly enforced, then official pricing of essential goods does very little to protect consumers, he added.
According to market analysis, the decline in SO transaction prices in the wholesale market has not been matched by lower cash prices for loose palm oil because the governmentadministered prices have not been cut for a long time.
Winter temperatures, which cause palm oil to solidify, have also reduced SO trading volumes.
Khatunganj SO trader Md Nazim Uddin said that the booking price of soya bean oil on the global market had remained relatively stable in recent months, while the palm oil market had fallen sharply.
He said, ‘A few days ago, booking prices dropped to their lowest level in years. The government should adjust the market, match local prices with global prices, and make sure imports and supply are ready before Ramadan.’
Regarding the price revision, an official from the commerce ministry told New Age that the process of the price revision of soya bean and palm oil is not updated.
He also said that the ministry is working to implement an updated and efficient process of price revision along with the ICMAB, which would finalise soon.
Once completed, the ministry would implement a realistic and practical price revision process in a sustainable measure, he added.
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