Soaring freight rates are fueling commodity prices

Some traders said wholesalers and importers raised the price of edible oil as demand increased after the lockdown ended. Rajib raihan

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Some traders said wholesalers and importers raised the price of edible oil as demand increased after the lockdown ended. Rajib raihan

Essential commodities such as edible oil, wheat, and sugar have become more expensive in Bangladesh as their prices have risen in international markets due to the shortage of supply and rising costs of shipping, hitting the wallet of consumers.

Importers and traders say the cost and time of transporting goods has more than doubled, as nearly every port in the world faces ship and container congestion due to the pandemic.

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The increased cost of transportation has had an impact on imported goods.

Prices for unbranded soybean oil have increased by up to 5 percent, or Tk 6-8 per kilogram, in the domestic market over the past month.

Now, bulk soybean oil sells for 140 Tk per kg, super oil 135 Tk and palm oil 127 Tk.

Likewise, branded oil has seen a price increase of 3 to 4 Tk per liter. The price of edible oil in bottles is 150 Tk per liter, compared to 142 to 145 Tk a month ago.

Mr Hasem, owner of Fultaz Super Shop in the town of Chattogram, said wholesalers and importers raised the price of edible oil as demand increased after the lockdown ended.

“They claim that the price has increased due to reduced supplies due to an import crisis and rising prices in the international market.”

Data from the National Board of Revenue (NBR) showed petroleum refiners imported crude soybean oil at 116,350 Tk per tonne in July, up 12%, or 12,772 Tk from June.

Sugar and wheat prices have also increased due to supply shortages and increased sea tariffs due to port congestion in exporting countries.

Traders at Khatunganj Wholesale Market, one of the largest wholesale commodity centers in Bangladesh, said sugar prices increased by Tk400 per maund to Tk 2,680 to Tk 2,700.

The Canadian wheat variety sells for Tk 1,270 per maund in the port city wholesale market, which was Tk 1,000 to 1,020 the previous month. The price of Indian wheat has increased from Tk 100 to Tk 1,120 per maund.

The increase affected the prices of flour (attack) and refined flour in the wholesale and retail markets.

On the wholesale market, atta was selling for Tk 1,380 per maund on Friday, compared to Tk 1,120 a month ago, and refined flour at Tk 1,850, compared to Tk 1,600 a month earlier.

Importers say purchases of wheat from international sources fell 15% year-on-year in fiscal year 2020-21, as prices soared in the international market and demand fell in the local market due to the drop. consumption induced by the pandemic.

Some 54.43 lakh tonnes of wheat were imported in FY21, compared to 64.34 lakh tonnes in FY20, according to data from the Bangladesh Bureau of Statistics.

Traders imported wheat at Tk 32,318 per tonne in July, a 14 percent increase from June.

Likewise, the price of sugar rose 19 percent to Tk 41,757 per tonne in one month.

Biswajit Saha, director of corporate and regulatory affairs at City Group, a consumer goods company, said transportation costs had nearly doubled in the past month.

“This is the main reason why the price of products increases in the international market.”

Shahed Sarwar, deputy general manager of K-Line Bangladesh Ltd, a shipping agent, said transportation was taking longer due to congestion in almost all ports around the world, including China, Singapore, Brazil and in Argentina.

“It takes an additional eight to twelve days to get a shipment of goods delivered. This has an effect on the shipping costs. “

Abul Bashar, chairman of BSM Group, one of Bangladesh’s top commodity importers, said wheat production had declined in almost all exporting countries.

“In addition, exporting countries have imposed additional tariffs. Thus, the price of wheat has increased,” he said, adding that commercial supply chains are not yet normalizing.

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