Sugar prices hit new high
Sugar prices hit all time high on the domestic market this week, putting additional strain on the wallets of consumers who are already battered by rising prices of essentials.
Retailers have been demanding as high as Tk 75 a kilogram for the sweetener in some residential areas in the capital for the past two-three days amid reduced supply and a tendency of hoarding among traders ahead of the fasting month of Ramadan.
At city markets, prices of a kilogram of sugar rose to Tk 68 to Tk 73 yesterday. The last record high price of sugar was Tk 70 a kilogram in September two years ago.
The new record high price comes at a time when people, irrespective of incomes are bearing the brunt of increased cost of living due to rising inflation, led by food items.
In the fiscal year 2010-11, average inflation rose to 8.8 percent soaring past the government revised target of 8 percent.
In the past one month, prices of rice edged up along with onion, potato, vegetables, and cooking oil. Prices of sugar rose by Tk 8.5 a kilogram in the same period, according to Trading Corporation of Bangladesh.
Traders blamed tightened supply due to closure of four out of six sugar refining mills.
Speculations of supply crunch also gave rise to the hoarding tendency ahead of the month of Ramadan when sugar consumption rises 28 percent to 4,000-5,000 tonnes a day to prepare sweet drinks and sweetened food stuff.
High demand pushes up the prices as there is a huge shortfall in supply, said Abul Hashem, vice-president of Bangladesh Sugar Merchants Association.
According to Hashem, daily supply from refiners and importers is at 1,500-2,000 tonnes against the demand for 4,000-5,000 tonnes.
''Prices have reached this level gradually as stocks in the hands of traders dwindle,'' he said, ''Prices will not cool down unless there is substantial supply to the market.''
Despite traders' insistence that there is a supply-demand gap, the government says the private sector has more than 2 lakh tonnes of sugar in hand, and there will be no shortfall during the Ramadan.
There is no reason for a supply-demand gap, said Md Mozibur Rahman, chairman of Bangladesh Tariff Commission, which recommends price structure for sugar and cooking oil to the government.
The spiral in prices is going on at a time when sugar prices remain upbeat on the international market after world's key exporter Brazil slashed its output forecast.
"We are passing a very difficult time for sugar in particular. World market situation is very volatile and prices are going up," said Mohiuddin Monem of AM Sugar Refinery Ltd.
Bangladesh consumes 14 lakh tonnes of sugar a year and more than 90 percent of the demand is met through imports from Latin America, mainly Brazil.
Monem said the sugar market will cool down automatically after two of the four closed refineries resume production.
Of the four refiners, Deshbandhu is likely to resume production soon. While Meghna Group Industries says it will restart its refinery at the beginning of next month.