Cooking oil supply uncertain

All forms of cooking oil have seen a price spiral in recent times due to the global food inflation.Photo: STAR

Concerns of a food supply squeeze have spread to cooking oil and will create a scramble for palm oil as an alternative to soybean oil.
As governments from India and Thailand to Egypt act to quell soaring food inflation and public anger, world cooking oil supplies look uncertain as the impact of dry weather and social unrest in the Argentine soy crushing sector lingers.
Bangladesh imports around 12 lakh tonnes of cooking oils a year, with palm oil taking up 60 percent of the total imports, according to sector leaders.
Unpacked soybean and palm oils have long been on the upward curve. Government data shows prices of unpacked soybean oil, mostly consumed by the poor, rose 46 percent year-on-year to Tk 103-107 a litre yesterday. In step with global prices, palm oil rose 61 percent year-on-year to Tk 96-97 a litre yesterday.
Consumers have complained that cooking oil supply is irregular in Dhaka and other parts of the country, and prices are not consistent. A homemaker said she bought a Teer brand 5-litre pack for Tk 550 on Thursday, although Tk 510 was printed on it as the maximum retail price. She said retailers advised her to stock up, as cooking oil supply is likely to be squeezed in the coming days.
Palm oil output and stocks, already lagging robust demand due to rains in top Southeast Asia producers, could be made worse, if the cooking ingredient becomes the next target for emerging markets seeking to buy big and dampen adverse effects of booming world food prices.
A scramble for palm oil may see world consumption outpace production, going beyond a supply deficit of 246,000 tonnes as seen in US Department of Agriculture data in the current marketing year to September.
Global food prices hit a record high in January, the UN Food and Agriculture Organisation (FAO) said on Thursday, adding that prices, already above the 2008 levels which sparked riots, were likely to rise further. FAO's Oils/Fats Price Index rose by 5.6 percent to 278 points, nearing the June 2008 record level, reflecting an increasingly tight supply and demand balance across the oilseeds complex.
In the same week, Thailand, usually self-sufficient, announced plans to buy 120,000 tonnes of crude palm oil to ease a domestic cooking oil shortage, a move that may spur other bigger importers to stock up.
Traders will focus on the next moves by India and China as the world's top two palm oil buyers use monetary policy tools and food cost measures to rein in rising inflation.