Sugar prices are going up on the domestic market, fuelled by soaring prices globally, amid concerns over tight supplies against demand.
The retail price of sugar rose by 8.62 percent or Tk 5 each kilogram to Tk 62 in the city markets in the last 10 days, extending the gradual hike that began in June last year.
Some Tk 3 was added per kilogram early this week after the raw sugar futures hit a 30-year high last week on worries of a further fall in global output as Cyclone Yasi smashed sugarcane in Australia, the world’s third largest exporter.
“We saw a downturn in prices last year. But the picture is reverse this year. The prices are going up consistently on the international market,” said Abul Hashem, vice-president of Bangladesh Sugar Baboshayee (businessmen) Association at Moulvibazar, a major wholesale hub.
“Unless there is a fall in global prices, there is hardly any possibility of easing on the local market,” he said.
In Bangladesh, after a steady fall in prices in the second quarter last year, the sugar market started rebounding since June 2010, according to Trading Corporation of Bangladesh (TCB) data.
Since then, the retail prices of sugar surged 50 percent, as the supply had been tight because of a poor harvest in the world’s biggest exporter, Brazil.
Drought and floods in Russia, Pakistan and other growing areas also supported the hike in sugar prices.
Bangladesh meets more than 90 percent of its domestic demand for around 12 lakh tonnes a year from imports.
Now, raw sugar sells at $780-$800 (cost and freight) a tonne on the international market, refiners said.
They said other costs such as insurance, cash and polarisation premiums for raw sugar to land at Chittagong Port from South America, also fuel the prices locally.
India, world’s second biggest producer, has also lowered its estimate of sugar output.
Mohiuddin Monem, deputy managing director of Abdul Monem Sugar Refinery Ltd, said the soaring prices have deepened fear among the local refiners
He claimed the local refiners are not getting the price to the extent the international market has gone up.
“The sugar prices on the local market still remain below the international prices,” he said, adding that the devalualtion of the taka against the greenback has increased the import costs.