23/08/2010 (The Daily Star) - The local edible oil markets may be feeling the heat of rising global palm oil prices, as the current price is 9.5 percent higher than mid-June's price.

Both palm oil and soybean oil rose. The retail price of unpackaged palm oil edged up 4 percent to Tk 75 per kg yesterday from early this month.

Unpackaged soybean oil traded at half of one percent higher yesterday compared with the beginning of the month, according to data compiled by state-run Trading Corporation of Bangladesh. Prices of packaged soybean oil also went up.

"Refiners raised the retail prices of edible oil in containers by Tk 2-4 a litre in early-Ramadan, on the grounds of a rise in prices on the global market," said Md Nowshad Alam, head of procurement of retail chain Meena Bazar.

Tariq Ahmed, director (operation) of one of the main importers and refiners, TK Group, last week said prices shot up on the international market in the prior three weeks.

"Global palm oil output is feared to be lower than [early] estimates, while increased demand from India and for Ramadan also pushed up the prices," said Ahmed.

"But the impact is yet to come to the local market. Still, the domestic market price is below the present global market, as the edible oil now available at retail and wholesale level was imported in between mid-June and mid-July," he said.

According to Commodity Markets Review of World Bank, global palm oil prices rose by $5 a tonne in April-June quarter from $808 a tonne in January-March. Current concerns of disruptions to harvesting and poor yields in major growing areas also fuelled price rises.

One local refinery official said a healthy profit outlook amid rising global prices encouraged some wholesalers to hold on to stocks. But the wholesalers accuse the refiners of cutting their supplies at the government-fixed price.

Abul Hashem, general secretary of the wholesalers' body of edible oil, said oil refiners are now reluctant to contract for deliveries at the government-fixed mill gate prices.

Hashem said the wholesale prices have been going up since the beginning of this month. He is a trader at Moulvibazar, a wholesale market of essentials in Dhaka, as well as a spokesperson for Bangladesh Paikari Vojjyotel Baboshayee Samity.

Importers argue that the price rise remains low compared to the world market because of the government's factory-price setting.

Early this month, global palm oil prices climbed on concerns that heavy rainfall and floods will disrupt harvesting in the world's two major palm oil exporters, Indonesia and Malaysia. Speculation of a likely decline in US soybean yields also pushed palm oil prices up, according to the financial news agency Bloomberg.

Biswajit Saha, general manager of City Group of Industries, claimed that refiners are now selling palm and soybean oil at the government-fixed prices of Tk 72 and Tk 76 at mill gate.

Ahmed predicted that prices would not surge on the local market given that present stocks are ample.