Edible oil price reaches historic high in country

Highlights: 

• The edible oil prices have increased at least eight times in two years
• In 3 years, soybean oil price increases by Tk2,000 per maund
• Soybean and palm oil prices have risen by 70% in two years
• At present, the maximum retail price of bottled soybean oil is Tk160 per litre and palm oil Tk119

The price of edible oil is now at the highest in the history of the country.

At present, soybean oil is being sold at Tk5,800 per maund (37.32kg) at the country's biggest wholesale market of Khatunganj in Chattogram which in 2019 was about Tk3,800. In three years, the price has increased by about Tk2,000 per maund.

Meanwhile, the price of palm oil has increased by Tk2,600 per maund in the last three years. Its current market price is Tk5,400 per maund, which in 2019 was Tk2,800.

The retail market for edible oil was not stable during the last two years due to a price hike in the international market. In addition to declining production due to the ongoing pandemic, the value of the dollar has also risen. Due to instability, the price of edible oil has increased at least eight times in two years.

Mahbubul Alam, president of Chattogram Chamber of Commerce and Industries, told The Business Standard that increasing prices at the retail level is not the solution. Besides taking initiative for large scale imports, the government can reduce ancillary costs of imports. If necessary, a subsidy should be provided.

He said importers are skeptical as the global oil market remains volatile. Fearing probable loss, they are importing less. Edible oil prices are rising as imports are lower than the demand.

According to international and domestic market data, the price per maund of soybean oil in the wholesale market was Tk4,300-4,400 in June last year. In September, the price increased to Tk5,000, and in November to Tk5,500, which was Tk3,800 in 2019. In three years, the price has increased by 66.66%.

At present, the price of crude soybean oil in the world market is $1,540 per tonne. In June last year, it was $1,518. In 2019, the price of crude edible oil was about $748 per tonne. Soybean oil is mainly imported from Brazil, Argentina and the United States.

Palm oil is used as an alternative to soybean oil in the country due to its relatively lower price. Palm oil is imported from Indonesia and Malaysia. In June last year, the price per maund of palm oil in the domestic market was Tk4,200. In September, the price dropped slightly to Tk3,600. However, in November, it increased to Tk4,300-4,400, which was Tk2,400 in 2019. As such, the price has increased by 125% in three years.

At present, the price of crude palm oil in the world market is $1,400 per tonne. In June last year it was $1,004 while in 2019, the price was only $585.

Retail market volatile for 1.5 years

At present, the maximum retail price of non-bottled soybean oil is Tk136 per litre, bottled soybean oil Tk160, palm oil Tk119 and a 5-litre bottle of soybean oil is sold for Tk760. The government fixed the price from 20 October last year.

In September 2020, the price per litre of non-bottled soybean oil was Tk80, bottled soybean oil Tk125, palm oil Tk70 and a 5-litre bottle of soybean oil was sold for Tk620. As such, the soybean and palm oil prices have risen by 70% in two years.

On 17 February last year, the government fixed the maximum retail price per litre of non-bottled soybean oil at Tk115, bottled soybean oil at Tk135, palm oil at Tk104 and a 5-litre bottle of soybean oil at Tk630. On 29 May last year, the maximum retail price of non-bottled soybean oil was fixed again at Tk129 per litre, bottled soybean oil at Tk153 per litre, palm oil at Tk116 per litre and a 5-litre bottle of soybean oil at Tk728.

Earlier in 2012, there was a record increase in the price of edible oil in the world market. The price of crude soybean oil was $1,400 per tonne. Soybean oil was then sold at a maximum price of Tk135 per litre.

The demand for edible oil in the country is 20 lakh metric tonnes per year. About 90% of it is imported from abroad.