Edible oil prices drop
Edible oil prices have fallen in the local market on the back of a price slump fuelled by higher global production and the US-China trade war, said processors and wholesalers.
Prices of loose soybean oil dropped 3.47 percent to Tk 82-85 a litre yesterday from Tk 85-88 a month ago at retail. Prices of loose palm oil have also declined.
Yet, prices of bottled soybean and palm oil remained unchanged, according to the Trading Corporation of Bangladesh.
“There have been some corrections in soybean prices as China cuts purchase from the US. We are reaping some benefits from the price fall,” said Mostafa Kamal, chairman of the Meghna Group of Industries, one of the leading importers and processors of commodity in Bangladesh.
Average price of soybean oil fell to $654 per tonne in August from $685 in June this year. Price of palm oil was $534 a tonne in August, down from $580 in June, shows World Bank Commodities Price Data.
Average prices of soybean oil and palm oil were $759 and $629 a tonne respectively in the January-March quarter.
“Higher year-on-year global production of both soy and palm oil has put downward pressure on prices of both oils,” said the US Department of Agriculture in its report on “Oilseeds: World Markets and Trade” released in the second week of this month.
The trade war between the US and China also weighed on soybeans, according to traders.
The USDA said the share of Brazil's soybean exports to China rose to 85 percent in August, 7 percentage points above the previous month.
“This increase is due to a turn to Brazilian sources by China following the implementation of duties on US soybeans,” it added.
“This has resulted in higher prices for Brazilian soybeans that discouraged purchases by importers other than China. This trend seems likely to continue and may strengthen in the coming months.”
AKM Fakhrul Alam, regional manager at the Malaysian Palm Oil Council for Bangladesh, Myanmar and Nepal, said importers would be more inclined to import from the US as a result of the price fall.
Bangladesh imported 11 lakh tonnes of soybean from the US out of 13 lakh tonnes in 2017. Importers have recently started buying from Canada, he added.
“The trade war between the US and China is benefiting not only us but also consumers in other countries,” he said, adding that prices of soybean meal are also likely to drop and thus contribute to the fall in prices of feed.
The USDA said US trade opportunities for markets outside of China would rise nearly 130 lakh tonnes in the coming year compared to 2016-17.
In contrast, increased purchases of Brazilian soybeans by China would result in an 80 lakh tonnes potential decline of US and other exporters' trade to China in the same period, it added.
Bishwajit Saha, general manager of City Group, another commodity importer and processor, said prices of US soybean hover around $310 (free on board) per tonne whereas those of Brazilian ones were $400.
“We may buy from the US in the coming days owing to the lower prices,” he said.
Kamal said his company buys both from Brazil and the US.
The USDA predicts that Bangladesh's annual consumption of vegetable oil will rise 6 percent year-on-year to 28 lakh tonnes in 2018-19 from that a year ago.
Soybean oil import will remain unchanged at 7.80 lakh tonnes in the current fiscal year while palm oil import will increase 10 percent to 16.5 lakh tonnes, the agency projected.