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Bangladesh's wheat
market may experience fresh volatility after Russia pulled out of a deal
brokered by the United Nations and Turkey. That could destabilize global grain
markets, wheat importers have warned.
Last July 17, 2023 Importers termed this development as a matter of concern for Bangladesh. Russia and Ukraine meet 40 percent of the country's wheat needs. Russia has told the United Nations, Turkey, and Ukraine that it will not renew the agreement, which allows Ukraine to export grain through the Black Sea.
The deal, which was reached in July and was renewed every two months, aimed to alleviate a global food crisis by allowing Ukrainian grain blocked by the Russia-Ukraine conflict to be exported safely. The deal expired on Monday (July 17, 2023). The latest move comes after Russia had been saying for months that conditions for its extension had not been fulfilled.
"In fact, the
Black Sea agreements ceased to be valid today (Monday)," said Kremlin
spokesman Dmitry Peskov, according to Reuters.
"Unfortunately,
the part of these Black Sea agreements concerning Russia has not been
implemented so far, so its effect is terminated."
Due to the suspension
of the deal, the price of wheat increased by $10 to $15 per tonne in
international markets yesterday, said Md Aminul Islam, managing director of
Nabil Group, one of the largest importers of wheat.
"However, due to
the number of wheat stocks that traders in Bangladesh currently have, the
price will not increase until October."
Abul Bashar Chowdhury, chairman of BSM Group, said the market condition will worsen in the coming days. He said the wheat price currently stands at $240-$270 per tonne, which was $390 to $420 before the deal was struck.
"I think the
price will go up again."
The international development seemed to have impacted the local market already. Wheat traded at Tk 1,750 to Tk 1,820 per maund at the Khatunganj wholesale market yesterday, which was Tk 1,725 to Tk 1,800 a day earlier.
Taslim Shahriar,
senior assistant general manager at Meghna Group of Industries, one of the
biggest commodity importers and processors in Bangladesh, said when significant
events occur in the global market, such as the halt of a grain deal or
geopolitical tensions, it can have an impact on the market.
"Uncertainty and
unexpected developments can bring about fluctuations in supply and demand and
overall market dynamics."
He added: "We
have seen good trends in the last two months. The price of commodities went
down after the grain deal was made."
Bangladesh's wheat
imports fell for the third consecutive year in 2022-23, suffered by falling
consumption for high prices and banks' sluggishness in opening letters of
credit amid the US dollar crisis.
Food ministry data showed wheat arrival declined 3.4 percent year-on-year to 38.75 lakh tonnes in FY23. It was 40.12 lakh tonnes in the previous year. The FY23 import of grain, for which Bangladesh is highly dependent on the global market, was the lowest in eight years.
Anup Kumar Saha,
executive director of Akij Insaf Group, said Russia has suspended its
participation in the deal at a time when wheat prices had started to decrease
at both international and local markets.
"It's a matter of
concern for Bangladesh."
In Dhaka, loose flour retailed at Tk 50 to Tk 52 per kg yesterday, down from Tk 52 to Tk 55 a week ago, data from the Trading Corporation of Bangladesh showed. The price of branded flour was Tk 58 to Tk 60 per kg, which was Tk 60 to Tk 65 a week earlier. Bangladesh's annual demand for wheat is 70 lakh to 75 lakh tonnes, 85 percent of which is met through imports.
Online/GFMM
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