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Surging global prices likely to push up wheat import cost

Yasir Wardad | September 18, 2018 00:00:00

The cost of wheat import is likely to be higher notably this fiscal year due to an upward trend in the international prices of the food grain.

The low global output is blamed for the price hike.

The hike might lead to an increase in wheat-based food prices in the country, adding to woes of the consumers further, market experts said.

Despite the increase in its prices, the volume of wheat import may not decline amid rising demand and gradual fall in domestic production of the food crop, sector insiders said.

The latest 'Cereal Supply and Demand Brief' by FAO forecasts 14 million tonnes of lesser global wheat production this fiscal year which now stands at almost 722 million tonnes, the smallest crop since 2013.

Food and Agriculture Organisation (FAO) in its September report said: "Dry and hot weather intensified yield reduction around Europe."

However, FAO forecast over expected low output of the staple is being imitated in the market as prices surged by 21-22 per cent in last six months, according to global commodity market portals.

Now wheat is being traded at $232-$240 a tonne in the global market. It was between $190 and $198 a tonne in March-April this year, trade web-portal IndexMundi data showed.

Wheat imports by Bangladesh, however, hit a record 5.9 million tonnes worth US$ 1.2 billion in the last fiscal year.

Local output declined to 1.3 million tonnes in the fiscal year 2017 and the same is projected at 1.1 million tonnes this fiscal, Department of Agriculture Extension data revealed.

Md Imrul Hassan, senior executive director at Bashundhara Group who markets packaged refined flour (maida) and coarse flour (aata), said despite increase in global prices, there is no sign of imports going downward.

Domestic supply is insignificant while local demand is increasing both in urban and rural areas, he said, adding that consumption of processed food is increasing at a rate of 10-12 per cent annually.

And wheat is one of the major ingredients for processed foods, he said.

Mr Hassan also said comparatively low global prices for last four years helped traders import the staple in a large volume.

USDA (United States Department of Agriculture) in its grain and feed annual report also projected 6.5 million tonnes of import by Bangladesh.

It said imports might surge because of further diversification in the food processing industry, and changing food habits of a growing population.

The USDA projection is 10 per cent higher than that of FY'18 wheat imports of 5.9 million tonnes.

The local traders imported 1.1 million tonnes of wheat in the July-August period of the current FY which was 0.97 million tonnes in the corresponding period of last FY.

Prices of flour (loose), however, remained static in the domestic market, but the cost of packaged flour increased by 1.5-3.3 per cent in last six months, according to the state-run Trading Corporation of Bangladesh.

Annual demand for wheat is above 7.0 million tonnes in the country, according to the Directorate General of Food (DGoF).

And the demand has been rising by 6.0-8.0 per cent on a year-on-year basis.

The government has a programme to import 0.5 million tonnes of wheat in FY'18.

In the first two months of the current FY, the government imported 0.094 million tonnes and the private sector 1.06 million tonnes.

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