Edible oil prices shoot up a day after refiners commit 'no hike'
Jasim Uddin Haroon | Thursday, 21 August 2008
Edible oil price shot up by Tk 2.50 per kilogram in the wholesale market on Wednesday just a day after the refiners ruled out chances for a further spike due to the recent 'significant' fall in the international market.
The prices of soybean rose to Tk 4000 per 40-kilogram from Tk 3900 while the palm oil rates increased to Tk 3300 from Tk 3200, wholesale market traders at Moulvibazar told the FE.
Haji Abul Hashem, general secretary of Bangladesh Sugar and Edible Oil Wholesalers Association, said the prices soared 'unexpectedly' Wednesday morning as the refiners increased mill-gate rates on the excuse that they incurred heavy losses following the decline in international market.
"At the mill-gate, this morning we found that prices of both soybean and palm oil were up by more than Tk 100 per maund (40 kilogram). We had no choice but to increase the price at the wholesale market," he added.
The sudden hike came just a day after the country's leading refiners promised that there would be no increase in the prices of edible oil due to the precipitous fall in major producing nations.
The president of the refiners association MA Rouf Chowdhury and the country's largest refiner Fazlur Rahman used television cameras to convey the good message to that countrymen, saying edible oil price would "neither increase nor fall" in the holy month of Ramadan.
Both said the country now has oil stocks of around 200,000 tonnes, enough to meet the demand for the next 45 days.
"They betrayed the nation blatantly," said a Moulvibazar trader, speaking on condition of anonymity.
"After hearing them making big promise, we thought the market might start to see some small declines from today. But it happened the opposite," he said.
"The commerce ministry and the BDR should investigate this sudden manipulated increase. We think some top refiners ganged up and increased the rates through foul-play," he added.
The wholesalers said the top refiners were acting like a cartel and trying to create 'artificial shortages' in the market, by curbing supply and hiking prices at the mill-gate.
Chief of BDR Major general Shakil Ahmed, whose agency monitors commodity prices in the local market, was shocked when he learnt that the refiners broke their pledges barely a day after making commitment.
"I will talk to them (refiners) very soon and then decide our future course of action," a visibly dismayed Ahmed said.
After a meeting with the top refiners at his office on Tuesday, General Ahmed said the edible oil price "should fall" in the local market as international market has been declining fast since July.
At the start of the week soybean cost US$ 1221 a tonne, or Tk 83.64 per kilogram, as it landed at the Chittagong port after the payment of shipment and terminal charges. It was $ 1463 a tonne, or Tk 100.22 a kg in July.The palm oil price stood at $ 1070 a tonne, or Tk 73.30 a kg on Sunday at the Chittagong port after the clearance of shipment and terminal cost. It was $1319 per tonne, or Tk 90.35 a kg at Chittagong port in July. When contacted MA Rouf Chowdhury, president of Bangladesh Edible Oil Refiners Association, said the price spike was a 'usual' event in which the refiners played no role.
"It is nothing unusual. The refiners did not influence the market forces. I think it may be due to a temporary supply shortage, which encourages wholesalers to hike their prices," he said.
The prices of soybean rose to Tk 4000 per 40-kilogram from Tk 3900 while the palm oil rates increased to Tk 3300 from Tk 3200, wholesale market traders at Moulvibazar told the FE.
Haji Abul Hashem, general secretary of Bangladesh Sugar and Edible Oil Wholesalers Association, said the prices soared 'unexpectedly' Wednesday morning as the refiners increased mill-gate rates on the excuse that they incurred heavy losses following the decline in international market.
"At the mill-gate, this morning we found that prices of both soybean and palm oil were up by more than Tk 100 per maund (40 kilogram). We had no choice but to increase the price at the wholesale market," he added.
The sudden hike came just a day after the country's leading refiners promised that there would be no increase in the prices of edible oil due to the precipitous fall in major producing nations.
The president of the refiners association MA Rouf Chowdhury and the country's largest refiner Fazlur Rahman used television cameras to convey the good message to that countrymen, saying edible oil price would "neither increase nor fall" in the holy month of Ramadan.
Both said the country now has oil stocks of around 200,000 tonnes, enough to meet the demand for the next 45 days.
"They betrayed the nation blatantly," said a Moulvibazar trader, speaking on condition of anonymity.
"After hearing them making big promise, we thought the market might start to see some small declines from today. But it happened the opposite," he said.
"The commerce ministry and the BDR should investigate this sudden manipulated increase. We think some top refiners ganged up and increased the rates through foul-play," he added.
The wholesalers said the top refiners were acting like a cartel and trying to create 'artificial shortages' in the market, by curbing supply and hiking prices at the mill-gate.
Chief of BDR Major general Shakil Ahmed, whose agency monitors commodity prices in the local market, was shocked when he learnt that the refiners broke their pledges barely a day after making commitment.
"I will talk to them (refiners) very soon and then decide our future course of action," a visibly dismayed Ahmed said.
After a meeting with the top refiners at his office on Tuesday, General Ahmed said the edible oil price "should fall" in the local market as international market has been declining fast since July.
At the start of the week soybean cost US$ 1221 a tonne, or Tk 83.64 per kilogram, as it landed at the Chittagong port after the payment of shipment and terminal charges. It was $ 1463 a tonne, or Tk 100.22 a kg in July.The palm oil price stood at $ 1070 a tonne, or Tk 73.30 a kg on Sunday at the Chittagong port after the clearance of shipment and terminal cost. It was $1319 per tonne, or Tk 90.35 a kg at Chittagong port in July. When contacted MA Rouf Chowdhury, president of Bangladesh Edible Oil Refiners Association, said the price spike was a 'usual' event in which the refiners played no role.
"It is nothing unusual. The refiners did not influence the market forces. I think it may be due to a temporary supply shortage, which encourages wholesalers to hike their prices," he said.