If the price of a product declines in the international market, the fall usually leads to cheaper rates in the domestic market.
But Bangladeshi importers have beaten the local-international market relationship as the country has witnessed record palm oil price of Tk4,100 per maund at a time when its price has been on the decline on the international market.
With several hikes in the last three months, the oil price spiked Tk300 per maund in just the last three days in the local market thanks to oil importers' intent to make quick bucks during this Ramadan.
Edible oil traders at Khatunganj wholesale market in Chattogram – the largest wholesale hub in Bangladesh – complained Bangladeshi importers are increasing the price in the domestic market through syndication.
Palm oil usually hovers around Tk2,000-2,500 per maund (one maund equals to 40.90 litres) in the local market.
Khatunganj oil traders said the international edible oil market, especially palm oil, faces a decline as new palm harvests hit Malaysian market in February this year. In the last two weeks, the price of the edible vegetable oil edged down by at least Tk500 per tonne.
Abdur Razzak, a Khatunganj oil trader, said there is a sufficient supply of palm oil in the domestic market. The booking rate in the international market has also calmed down.
"The importers are increasing the price of the product by syndication to make unusual profits," he complained.
According to IndexMundi, palm oil prices started to rise in the international market in September 2019. At that time, per tonne palm oil was at 2,428 Malaysian ringgit which rose to 4116 Malaysian ringgit in February this year.
Then the price started to decline as new palm harvests arrived in Malaysian market.
According to the mpoc.org.my, per tonne palm oil was at 3,807 ringgit in mid-April last year. The rate dropped to 3,650 ringgit in April this year.
An estimation including the international rate plus the shipping cost suggests the importers are making around Tk419 profit per tonne of palm oil import.
Gias Uddin, an edible oil trader at Khatunganj, complained that when the price of palm oil in the international market stood at 4100 ringgit, the rate in the domestic market was around Tk3800. As the international price has come down to 3,700 ringgit, the domestic market has gone up by Tk300 on the contrary.
Contacted, City Group Executive Director Biswajit Saha told The Business Standard they are selling soybean and palm oil at the mill gate at government-fixed rates.
"We are not responsible if any trader sells oil outside the mill gate or at Khatunganj at an extra price," he added.
According to Chattogram Customs, around 6.52 lakh tonnes of refined and crude palm oil was imported through Chattogram port in the last nine months of the current financial year. In the first nine months of the previous financial year, nearly 10.90 lakh tonnes of palm oil were imported.
In the first nine months of the last financial year, 3.95 lakh tonnes of soybean oil were imported. In the same period this year, 4.33 lakh tonnes of soybean oil have been imported.
In the last three days, the price of super palm olein has also gone up by Tk200 per maund. Super palm olein was at Tk4,150 per maund which now is at Tk4,350.
However, the price of soybean oil has been unchanged due to low sales. Soybean oil has been at Tk4,550 per maund in the wholesale market for the past two weeks.
SM Nazer Hossain, vice-president of the Consumers Association of Bangladesh, said the government fixed the edible oil prices in the face of hikes in the international market to keep the rates stable in the local market.
He urged the commerce ministry to re-fix the rates as the prices in the international market have come down.