Palm oil prices in the international market shot up by $35 per ton during the last week, deteriorating further the ongoing edible oil crisis that had been deepened in the domestic market in the wake of widening gap between demand and supply, sources told Business Recorder on Tuesday.
They said that palm oil prices have broken the $500 per ton fence and reached at $520 per ton on Tuesday, depicting an upsurge of $35 per ton in a week.
With the increase in palm oil prices at the international front, the domestic scenario had also started changing as the edible oil prices had also been increased by Rs 120 per 16-kg canister during last month.
"The prices of locally manufactured edible oil had increased by Rs 120 on a 16-kg canister and brought the prices to Rs 920 per 16-kg canister," said a dealer, adding that retail price of one-kg loose edible oil was being tagged at Rs 60 per kg, compared to Rs 55 per kg, showing a jump of Rs 5 per kg in just a month's time.
Senior traders pointed out that the international price of palm oil of $520 per ton showed that the imported commodity would be tagged nearly at Rs 1865 per 37-kg or Rs 50,000 per ton, when reached domestic market.
However, the prices of branded commodity being manufactured locally by big players, were still stagnant.
"The prices of edible oil being produced by large-scale companies had not increased yet, however, the companies had withdrawn different prize schemes offered earlier to the retailers," said General Secretary, Karachi Retail Grocers' Association, Fareed Qureshi.
"Prices of 5-kg cooking oil tin was still available at Rs 390, while 2.5-kg tin was being tagged between Rs 190 to Rs 205 depending on the brand of the oil," he remarked.
The traders had also hinted cooking oil price hike in the coming days, saying that tins of 2.5-kg and 5-kg cooking oil could be sold at around Rs 225 and Rs 420 respectively in the next week.
Citing reasons behind higher international palm oil prices, one importer said, "A number of countries have started setting up plants for the production of bio-diesel with palm fruits, including Singapore, Malaysia, China and some European countries."
"The edible oil would now be used as fuel and this situation had badly affected those countries including Pakistan, which fulfil the domestic demands through imports," he added.
He mentioned that the two world's biggest palm oil producers - Malaysia and Indonesia had also decided to utilise their 40 percent palm fruits as fuel after witnessing extraordinary crude oil prices world-wide.
"The present situation could destabilise local and international demand and supply mechanism because the petroleum products prices were staying above $76 per barrel, while the geo-political uncertainty in the central Asian region and Middle East does not show that the petroleum prices would witness steep decline in the next months to come.
On the contrary, the country's edible oil consumption stands at around 2.2 million tons annually which increases to around 3 million tons annually during the holy month of Ramadan.
"Of this 2.2 million tons, around 0.6 million tons was supplied by some 128 small and big edible oil refineries across the country, while the remaining gap was to be filled through imports mainly from Malaysia and Indonesia," importers said.
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