The price of palm oil has increased 33% in the country in just nine days. Importers attribute this to the sudden fuel oil price hike on 5 August.
The local price of palm oil which was on a downward trend for some two months, has increased again at a time when global market prices for the essential item have been falling gradually for some time now.
On Sunday, a maund (40.9 kg) of palm oil sold for Tk6,000 in the country's largest wholesale hub, Khatunganj in Chattogram, which was Tk4,500 before the fuel price hike.
Importers said the recent fuel oil price hike and subsequent surge in transportation costs, as well as the volatile dollar market, contributed to the sharp price increase of the essential item.
"It's true that the price of palm oil has decreased in the global market. But we cannot benefit from that as the oil currently being sold in the market was imported at previous higher rates," said Pradeep Karan, deputy general manager of City Group – one of the few edible oil importers.
"On top of that, we now make import payments for the shipments which we booked two months ago at higher dollar rates; up to Tk15 higher on the dollar."
With the critical situation, the recent hike in fuel oil prices driving higher transport costs has pushed palm oil prices up substantially, he told The Business Standard (TBS).
"Apart from the fuel price hike and the dollar crisis, local trade and market manipulation have also been a great factor in the price hike of palm oil and several other commodities," a Khatunganj-based importer, who wished to remain unnamed, told TBS.
"If there is a possibility of a price hike for a product, the price of that particular product increases rapidly at Khatunganj with goods changing hands at a markup among traders," he explained.
However, talking to TBS, several wholesalers said it is importers who have increased the price of palm oil, taking advantage of the fuel price hike.
"The import cost of a maund of palm oil is now some Tk4,500 which includes all the costs such as freight charges and refining cost. But, importers have raised the price significantly to make higher profits," Abdur Razzak, proprietor of Ismail Trading at Khatunganj, said.
On Sunday, the global palm oil booking price fell to $954 per tonne from the record high of $1,776 in March this year, according to IndexMundi.
Although the palm oil market has seen volatility over a couple of days, the soybean oil market has remained unchanged for long. A maund of soybean oil is now Tk7,000 at wholesale market.