There is no good news for shoppers at the market. At least, not yet.
Global food prices have continued to tumble since mid-May and the downward trend got a fresh push after Ukraine and Russia reached a deal on 22 July to allow crucial grain shipments to safely leave Black Sea port, but consumers in Bangladesh are unlikely to see lower prices anytime soon.
Imports have slowed down as businesspersons have taken a wait-and-see position with an unusual drop in commodity prices in the international market and rallying dollar prices in the domestic market.
Importers told TBS that at present it takes at least one and a half months for a commodity to reach the country after booking.
Amid the current volatility in the dollar market, no one can say where the price of the greenback will stand after one and a half months, they said, adding that as a result of this even if a product is booked at a lower price, the LC (letter of credit) settlement will be costlier because of a costly dollar.
The greenback soared to a record Tk112 in the kerb market on 25 July before coming down to Tk108 a day later. It was selling at Tk110 on Thursday last. The taka was devalued by the central bank for the third time in a month on 24 July.
Besides, there is a risk that prices may go down further in the international market before products booked at current prices reach the country, they continued.
As a result, even if prices of products have fallen in the international market, traders have taken a cautious stance in opening import LCs.
City Group is the market leader in the country's consumer goods sector. The conglomerate also is wary of the current dollar crisis in the domestic market and product price fluctuations in the global market.
Biswajit Saha, director of City Group, told The Business Standard that if the prices fall in the global market, consumers reduce purchases in the hope that prices will drop in the country.
"Vendors do not want to buy products even if they are sold at the previous LC rate. Consumers do not take into account the hikes in dollar price, freight charges, transport costs, and factory costs. As a result, importers do not take the risk before the global market stabilises," he said.
Mohammad Ali Hossain, managing director of PHP Family, said banks are currently conservative in opening LCs for importing products or industrial raw materials due to rising dollar prices. Therefore, even if the prices of some products have decreased in the international market, traders have not been able to benefit from the trend by importing them with new LCs at the current price of the dollar.
But, if commodity imports fall at this time, it will affect the market in the coming days as domestic consumers will not get the benefit of the lower prices in the international market, he observed.
Traders and importers based in Chattogram's Khatunganj, the main hub for the import and trade of consumer goods also expressed similar concerns and said they are trying to avoid major losses by cutting back on imports at this time.
Dip in LC opening
Islami Bank, the market leader in executing foreign trade transactions, opened 3,832 LCs worth Tk4,591 crore in the first 27 days of this month, which is 52% less when compared to 6,557 LCs worth Tk10,030 crore opened in June. In May, the bank opened 5,121 LCs worth Tk7,290 crore.
An official of the Kahtunganj branch of Islami Bank on condition of anonymity told TBS that the volume of import LCs opened at the branch has decreased by at least 20% compared to last month and 30% compared to May.
On the other hand, the bank's Chawkbazar branch that opens an average of Tk8-10 crore worth of import LCs every month in normal times could open only Tk2 crore worth of LCs in the first 27 days of this month.
Other banks also are witnessing a similar downward trend in LC opening.
In normal times, the Khatunganj branch of Dutch-Bangla Bank opens at least 10 LCs, but the number is only two as of the 28th this month. The number was five in June.
Meanwhile, the Khatunganj branch of Bangladesh Commerce Bank which usually opens Tk10 crore worth of import LCs every month could not open a single LC this month.
Shahadat Hossain, manager of the Chawkbazar branch and senior vice president of Islami Bank, said importers had increased their stocks anticipating further hikes in prices, but they are now at risk of losses because of the continuous fall in global commodity prices, and dollar shortages in the local market.
Falling trend in imports
Data from the Bangladesh Bank also shows a downward trend in the import of goods.
Total imports to the country stood at $6.80 billion this June, down from $7.28 billion a month ago. The volume was $7.72 billion, $8.32 billion, and $8.33 billion in March, February, and January, respectively, according to the central bank.
Meanwhile, data obtained from the National Board of Revenue reveal that imports through the country's premier port, Chattogram port, have fallen drastically in the past couple of months.
In the first 28 days of this month, Tk11,707 crore worth of goods were imported through the port, which was nearly Tk54,000 crore in May.
The global consumer goods market started to become unstable at the beginning of this year, even more so, the outbreak of the Russia-Ukraine war at the end of February left a huge impact on the commodity market. Prices of consumer goods broke all previous records amid the war.
In March, the price of crude soybean oil rose to $1,957 per tonne, while that of palm oil rose to $1,777. Since then, prices are on a downward trend. At present, the per tonne price of soybean oil has decreased to $1,322 and that of palm oil to $860.
Wheat prices also have started to fall after the Russia-Ukraine deal to reopen the Black Sea port.