Small traders alarmed as edible oil price tumbles at Khatunganj

After a prolonged increase, edible oil prices dropped sharply at Khatunganj wholesale market in Chattogram, falling by around Tk600 per maund in the last three days. 

Hundreds of small investors now fear they will lose capital due to the sudden drop in prices engineered by a syndicate.

They alleged that a syndicate was responsible for an unusual price hike in the past two months even though prices remained stable in the global market. 

The same syndicate, they claimed, is now working behind the scenes to reduce prices since late last week.

Some 2,000 traders, including large and small investors, deal in edible oil at Khatunganj, and over Tk100 crore of edible oil is traded every day. 

Soybean oil is selling for Tk3,300 per maund at Khatunganj, the country's largest wholesale market for consumer goods, down from Tk3,900 late last week. 

City Group's palm oil is being sold at Tk3,290 per maund while TK Group and S Alam Group are selling it for Tk3,300 and Tk3,310 respectively.

Near the end of last week, super palm oil was selling in the wholesale market for Tk4,000 per maund. Now the price is Tk3,500. 

City Group's super palm oil is being sold at Tk3,480 per maund, while TK Group and S Alam Group are selling it for Tk3,490 and Tk 3,500 respectively.

Similarly, soybean oil prices decreased by Tk400 per maund in the last three days. It is now being sold at Tk4,000, down from Tk4,400 near the end of last week. 

At present, Khatunganj has a high supply of soybean oil of TK Group, City Group, S Alam Group, and Meghna Group.

Khatunganj traders said edible oil prices in the international market had been rising for over two months. At present, per tonne palm oil is being sold in the global market (Malaysia) at 3,700 Ringgit (Tk77,638). After adding 15% VAT and other expenses, the purchase price stands at Tk3,400 per maund. 

But at present, palm oil is being sold in the domestic market at Tk3,300, less than the purchase price.

Edible oil trader Md Moniruzzaman, also a small investor, said the rise in prices in the international market and the manipulation of importers and traders had pushed up palm oil prices several times in the last two to three months, which reached Tk3,900 per maund last week. 

But importers and traders started reducing the price again after selling the amount of products mentioned in the delivery order (DO), he said, adding, "Ordinary traders who buy slips against the DO are at risk of losses due to the sudden decrease in prices."

Traders said a handful of companies import edible oil, and several big trading companies at different wholesale markets in the country, including Khatunganj and Moulvibazar, buy refined edible oil from the importers through DO. 

They said these trading companies sell slips to wholesalers and small investors on the basis of nominal advance payments against the DO, which plays a role in the abnormal rise and fall in prices, much like the capital market. 

The prolonged increase in edible oil prices followed by the recent fall was manipulated this way, they claimed. 

Soybean oil is being bought from the international market (America) at $40 (Tk3,393) per maund. After adding VAT and other expenses, the purchase price stands at Tk3,900 per maund.

Abdur Razzak, a small edible oil investor, said soybean price in the country remains within Tk3,000 per maund in normal times, but it went up to Tk4,300 this time due to the manipulation of importers and wholesalers, surpassing the record in the last decade. 

But market players think importers and trading companies accumulating profits through DO and slip trading has led to the sudden drop in prices.

According to Chattogram customs, 18.21 lakh tonnes of refined and non-refined edible oil was imported through the Chattogram port last year, up from 15.16 lakh tonnes in 2019. 

As there is no government data on demand, production, import, and net supply of consumer goods in the country, market players think the government's role in controlling the market is failing.

Chattogram customs figures show TK Group imported 6.87 lakh tonnes of edible oil last year, City Group 3.53 lakh tonnes, S Alam Group 3.41 lakh tonnes, and Meghna Group 2.83 lakh tonnes.