Wheat prices are spiralling in the international market as with the onset of the Russian invasion of Ukraine, wheat import from both these sources has become uncertain.
Bangladesh is set to be affected as the country imports a large quantity of wheat from Russia and Ukraine.
The western sanctions on Russia and the war there are having a negative impact on the supply of other items to Bangladesh, not only wheat.
Businesspersons in the steel sector are concerned too. Ukraine is a major source of scrap iron used as raw material for steel rods.
After the onset of the war there, the price of rods has gone up by Tk 5,000 per tonne.
Russia launched its attack on Ukraine on 24 February. After that, at the behest of the western countries, transactions with 12 banks in Russia and 2 in Belarus through the international payment system SWIFT, are being been restricted. This restriction will come fully into effect from 12 March.
Leading shipping lines of Europe have also declared a halt on carrying cargo to and from Russia. Goods are not coming from Ukraine either as the commercial operations of many of its ports have come to a stop due to the war.
According to Bangladesh Bank, in the 2020-21 fiscal, goods worth 800 million dollars (80 crore dollars) were imported from Russia and Ukraine. A large part of this was wheat. Mustard, chickpeas, scrap iron, soybean seeds and chemicals are also imported from Ukraine.
Chattogram port records show that last fiscal 5,455,000 tonnes (54 lakh 55 thousand tonnes) of wheat was imported through this port, 26 per cent of which came from Russia and 15 per cent from Ukraine. That means, 41 per cent of the wheat imported through Chattogram port is from Russia and Ukraine.
The importers have said that they open letters of credit in Singapore, UAE, Switzerland and any other third country, and then import goods from Russia. With the sanctions on Russia now in place, the suppliers in the third countries are not accepting letters of credit in order to avoid any complications. But now there is uncertainty even in the cases where letters of credit have been issued and the goods were awaiting shipment.
According to the US-based commodity exchange Chicago Board of Trade (CBOT), on 28 February wheat was sold there at 340 US dollars per tonne. Four days later, on Friday, this shot up to 495 dollars per tonne.
In the meantime, the price of wheat has gone up in the wholesale market. Shahed Ul Alam, owner of RM Enterprise and wholesaler in Khatunganj, Chattogram, said there is no Russian or Ukrainian wheat in the market now. Canadian and Indian wheat is being sold. After the war broke out, Canadian wheat jumped to Tk 1820 by increasing Tk 100 per maund yesterday, Sunday.
He said Indian wheat jumped to Tk 1260 by increasing Tk 160 per maund.
The price of flour (brown and white) increased even before the Russia-Ukraine war. On Sunday's market price list of the government's Trading Corporation of Bangladesh (TCB), unpackaged brown flour (atta) sold for Tk 34 to Tk 36 per kg, which was 13 per cent higher than one year ago. And packaged atta sold for Tk 40 to Tk 45 per kg, going up by 25 per cent in one year.
Price of white flour (maida) has gone up too. According to TCB, the price of unpackaged flour has increased by 39 per cent in one year. It is now selling for Tk 47 to Tk 50 in the market.
Chickpeas and soybean
BSM Group of Chattogram recently opened an LC (letter of credit) to import chickpeas from Russia. The consignment was supposed to reach before roza, the month of Ramadan. The suppliers two days ago informed BSM Group that this shipment to Bangladesh has now become uncertain.
BSM Group chairman Abdul Bashar Chowdhury on Sunday told Prothom Alo, the suppliers had issued a notice that 'force majeuer' had been imposed on Russia, creating uncertainty in shipping the consignment.
Chickpeas are in high demand during the fasting month of Ramadan. Last fiscal over 600,000 tonnes of chickpeas arrived in Bangladesh by sea route, 13 per cent from Russia and 2 per cent from Ukraine.
Ukraine and Russia are among the top 10 suppliers of soybean to the global market. The war has affected the soybean market too. According to CBOT, the price of soybean has increased by 2 per cent over the past four days. As it is, the market prices had skyrocketed from beforehand.
Director of TK Group, Mohammad Mustafa Haider, told Prothom Alo that prices had gone up in the global market due to corona. And now with supplies from Russia and Ukraine being held up because of the war, pressure has mounted on the global market.
Rod prices go up
Scrap iron was 570 dollars per tonne before the Russia-Ukraine war. On Sunday it was 650 dollars in the international market. In the local market, over the past 10 days, the price of rods shot up from Tk 5,000 per tonne to Tk 83,000 to Tk 85,000 per tonne.
When asked what could be done in this situation, research director of the Centre for Policy Dialogue (CPD), Khandakar Golam Moazzem, told Prothom Alo, "Roza is ahead. It is most important to keep supplies normal at this time. Due to the difficult circumstances, quick decisions have to be taken at any time." He said it would be expedient to import from neighbouring countries.
A report of Times of India on Sunday said that India has increased wheat exports. By the end of March, in the last 12 months its wheat exports may reach 7 million tonnes by the end of March.
* This report appeared in the print and online editions of Prothom Alo and has been rewritten in English by Ayesha Kabir