Wholesale and retail prices of palm oil in Dhaka have increased by Tk 8 to Tk 10 per litre in the last couple of days, which importers and traders say was caused by price rises in international markets and a reduction in supply. 

Though the government last December had fixed the rate of loose palm oil at Tk 117 per litre, retailers said they were charging Tk 125 to Tk 127.

Wholesalers had attributed the price increase to a supply shortage, said Ikramul Haque Naeem, manager of Abdur Rauf Enterprise, a retailer in Karwan Bazar, one of the largest kitchen markets in Dhaka city.

The change has been recorded by state-run Trading Corporation of Bangladesh in its daily market rate data.

In the international market, the price of each tonne has gone up from $940 to $1,040, said an importer.

Palm oil is used in the production of foods such as cake, chocolate, biscuits, margarine and frying fats, according to industry insiders.

It is also found in cosmetics, soap, shampoo, cleaning products and can be used as a biofuel.

Soybean oil costs way more, pushing up palm oil use alongside its price, said Abu Bakar Siddique, a wholesaler in Karwan Bazar.

According to a government notification last December, the price of a five-litre bottle of soybean oil was supposed to be sold at Tk 906 (meaning a litre was costing Tk 181).

Refiners stopped giving a discount of Tk 40 on each carton (20 litres) of soybean oil and ‍a 5-litre bottle is now selling for at Tk 880-890, said Mohammad Bablu, manager of Mayer Doya General Store in Karwan Bazar.

Five days ago, each maund (around 37 kilogrammes) of palm oil was Tk 4,770 and now it is Tk 4,820 to Tk 4,830, informed Siddique.

He also claimed that refiners were leaving 20 per cent to 25 per cent of his demand unmet.

Refiners might be charging more for rises in the international market, said Abul Hashem, general secretary of Bangladesh Edible Oil Wholesalers Association.

Indonesia has reduced palm oil exports, for which each maund was costing $80 to $90 more in the international market, said Taslim Shahriar, senior assistant general manager at the Meghna Group of Industries, one of the country's biggest commodity importer and processor.

Indonesia is the world's biggest palm oil producer having a major control of the international market.

Futures price rose 1 per cent on Thursday, trading near a seven-week high, as higher crude oil prices made palm a more attractive option for biodiesel feedstock, according to Reuters.

Lingering concerns about tight supply from top producer Indonesia and weaker Malaysian production outlook have supported the market over the past two weeks, it said.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market, it added.

The country's annual demand for cooking oils stands at around 2.2 million tonnes, 90 per cent to 92 per cent of which is imported, according to the commerce ministry.

Of the import, 42 per cent is soybean oil and 50 per cent palm oil as of 2022.