Reduced product prices in global market, freight rate do not affect local market

The prices of essentials have been declining in the international market for more than four months, overcoming the effects of Covid-19 pandemic and the Russia-Ukraine war. At the same time, freight rates have decreased by about 50%.

However, during this period, the prices of essentials in the country have not decreased. Rather, most of the consumer goods are still being sold at higher prices than before.

Traders said due to the price manipulation by the importers and lack of supervision by government agencies, consumers are not benefitting from decrease in booking rates in the international market and ship fares. Even the prices fixed by the government for edible oil and sugar are protecting importers more than consumers.

Meanwhile, importers claim that despite the drop in product prices and freight rate, the rise in the value of the dollar against the taka has driven up the import costs higher than before. As a result, the prices of imported goods are not decreasing.

Abul Bashar Chowdhury, chairman of BSM Group, said, "From the time when the price of goods in the world market started to decrease, the dollar exchange rate started to increase in the country. Currently, the importers have to pay Tk15 more per dollar compared to earlier periods. That is why the consumers are not benefitting from the decrease in the product price in the international market."

Edible oil

After the Russia-Ukraine war started, the price of palm oil rose highest to $1,945 per tonne in March. On Tuesday it was sold at $819 per tonne in the international market. That means, palm oil price has decreased by $1,126 per tonne or around Tk100 per litre.

From the last week of April to the third week of June, palm oil price rose to Tk7,000 per maund in Khatunganj. On Tuesday, palm oil was sold at Tk5,000 per maund (40.9 litre). That means the price of the product has decreased by Tk49 per litre only.

Soybean oil was sold at $1,533 per tonne in the international market on Tuesday. The price of soybean oil rose to $1,761 per tonne in the second week of June. As such, the price of the product has decreased by $228 per tonne or Tk21 per litre.

From the last week of April to the third week of June, soybean oil sold at Tk7,500 per maund in Khatunganj. On Tuesday, it was sold at Tk6,700 per maund. That means, the price of the product has decreased by only Tk19 per litre in the wholesale market.

Wheat

The price of wheat was $916 per tonne before the war, but within two weeks of the start of the war it reached $1,421 in the international market. This increased price prevailed till May and the price of the product slowly started to decline.

Before the Russia-Ukraine conflict, Indian wheat was selling for just Tk900 per maund and Canadian wheat was selling for Tk1,100 in Khatunganj. Indian wheat price reached Tk1,650 and Canadian wheat Tk2,150 per maund in May in the wholesale market.

After decreasing slowly during the last four months, wheat price dropped to $918 per tonne in the world market on Tuesday. As such, the price of the product has decreased by $503 per tonne or Tk51 per kg.

The price fall in the international market has not much affected the price of wheat in the local market in the last four months. From July to August, the price of the product decreased by Tk100-150 per maund, but recently it has jumped again.

On Tuesday, Indian wheat was sold at Tk1,650 and Canadian wheat at Tk2,200 per maund in Khatunganj.

Sugar

The day before the Russia-Ukraine conflict, the price of sugar in the world market was $495 per tonne. Since then, the price of sugar started increasing gradually and reached $593 per tonne in June.

The sugar price has been dropping during the last four months and reached $410 per tonne on Tuesday. That means, the price of the product has decreased by $183 per tonne or Tk18 per kg.

In the last four months, the sugar price in the international market has fallen drastically, but in the domestic market it has increased.

Sugar was sold at Tk2,850 per maund in Khatunganj from April to May, but at present, it is being sold at Tk3,250 per maund in the wholesale market.

Before the conflict in Ukraine, the price of sugar in the wholesale market was around Tk2,600 per maund. That means, the price of sugar has increased by Tk11 per kg in the last four months.

Corn

Since the beginning of the Russia-Ukraine conflict, the price of corn, one of the main produces of those countries, has been unstable in the international market.

The booking price of corn stood at $817 per tonne in late April, rising steadily since the start of the conflict.

After a period, the price of the product started decreasing in the international market. On Tuesday it dropped to $697 per tonne, which was almost the same as the pre-war price. In the last four-five months, corn price has decreased in the international market by $120 per tonne or Tk12 per kg.

Although the price of corn has fallen in the international market, it has not decreased much in the domestic market.

On Tuesday, corn was sold at Tk1,300 per maund in Khatunganj.

The price of corn was Tk700 per maund before the war, but it reached Tk1,418 in April. That means, the price of corn in the domestic market has decreased by only Tk3 per kg in the last two months.

Traders blame corporations

Azizul Haque, owner of Haque Trading in Khatunganj, said, "The importers increase the products prices in the domestic market when those increase in the international market. But when the prices of the same products come down in the global market, the importers do not decrease them."

Several consumer goods traders of Khatunganj, including Azizul Haque, complained that a number of corporations currently dominate the import of essential products. These importers are controlling the market and manipulating prices through a syndicate.

The traders in Khatunganj also complained that the government's monitoring teams are not playing an active role in market regulation. As a result, consumers are not benefiting from the decrease in product prices in the international market.

Chattogram Chamber of Commerce and Industry President Mahbubul Alam told TBS, "The prices of most consumer goods have decreased in the last few months in the world market. However, it is not possible to reduce the prices of these products in the domestic market due to the dollar crisis. The importers have to pay higher import prices for imported products than before.

"However, since the cost of transporting goods through international routes has come down, importers should adjust the price of the goods too."