Traders say the prices set by the government are lower than that of the world market, which discouraged them to import soybean oil and eventually led to a decrease in opening LCs.

The government fixed the selling price of soybean oil at the mill gates at Tk 136 per litre. On the other hand, the price stands at Tk 165-174 per litre if a trader imports the edible oil and sells it in the local market.

It is quite evident that the traders refrained from opening LCs to import edible oil so as to avoid losses, though they do not admit this openly.

A number of traders, requesting anonymity, told Prothom Alo that the bank officials calculate the import costs and local market price of the commodities while they approach the banks to open LCs. The bankers naturally do not show interest to open LC when they find the local price lower than that of the international market.

The bank costs of LC will not be covered if a trader incurs losses on imported goods, the traders explained, saying that this is exactly what is happening in the soybean oil market now.

Mahbubul Alam, the president of the Chittagong Chamber of Commerce and Industry, told Prothom Alo that there is no alternative to increasing the supply of soybean oil to address the prevailing situation.

“Import refined soybean oil through the Trading Corporation of Bangladesh (TCB) is needed, in addition to the private importers. The duty on imported soybean oil should be waived for the crisis period if the authorities find it necessary. There would be no fear of short supply once it is brought through both private and public channels,” he said.

Cost of import

A visit to the Chattogram port reveals a total of 21,000 tonnes of soybean oil was unloaded from a vessel anchored at the port this week. Of the total quantity, Bashundhara Group imported 8,820 tonnes of soybean oil while TK Group brought 8,000 tonnes and City Group 4,152 tonnes.

TK Group spent $1,869 to import each tonne of oil and the cost stood at Tk 160 per litre with the value added tax (VAT) and unloading costs. The figure is expected to rise further if the cost of refining, transportation and additional charges are taken into account.

TK Group Director Tariq Ahmed claimed the costs will rise to Tk 174 per litre until making the oil available in the market.

“It would cost Tk 190 per kg (Tk 174 per litre) to make the oil available in the local market. The price would be quite similar even if a new LC is opened,” he told Prothom Alo.

However, the import cost of City Group was less than TK Group as it had opened the LC earlier. They imported each tonne of soybean oil at $1,760.

The City Group's cost will stand at Tk 150 per litre after paying VAT. The figure will be Tk 165 per kg until making the oil available in the market.

Meanwhile, the government has fixed the selling price of open soybean oil at Tk 136 per liter and bottled soybean oil at Tk 160 per litre at the mill gates.

Now, the traders have no choice but to count losses.

Retail and wholesale markets

The supply of bottled soybean oil was found lower than usual at some retail stores in Dhaka and Chattogram. The demand was also medium as most of the consumers bought oil before Ramadan for the whole month. However, the demand would rise with the crowd of consumers after Eid.

Apart from the retail market, the soybean stocks of the wholesalers are also decreasing. The traders at the Khatunganj Bajar in Chattogram disclosed that the trading of soybean oil was limited at the market. Each litre of soybean oil was selling at Tk 150-151 at the wholesale market.

Shahed-Ul Alam, the proprietor of wholesale shop RM Enterprise at Khatunganj, said soybean trade decreased at the wholesale market due to short supply from the refineries.

Demand vs import

A total of 7.85 lakh tonnes of soybean oil was imported in the fiscal year 2020-21 while another 4.33 lakh tonnes was collected from 24 lakh tonnes of soybean seeds. As a whole, 12 lakh tonnes of soybean oil were imported in the year, excluding the waste.

The FY21 soybean import data implies that Bangladesh has a monthly demand for 100,000 tons of soybean oil – 65,000 tons are imported in crude form while 36,000 tons through soybean seeds.

Currently, six companies in the country bring soybean from abroad and sell it in the local market after refining. Besides, a number of companies import soybean seeds, extract oil from those and sell in the local market.

The annual demand of 12-13 lakh tons of soybean oil is met in both ways. The demand decreases slightly when the price soars.

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