Bangladesh Faces 3 Falls: Wheat Products Use, Stocks, and Taka Value
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Bangladesh is the 47th largest Wheat-producing country in the world. The country’s Wheat output has stagnated between 1.1 million tons and 1.2 million tons in the last few years. Post forecasts MY 2023/24 Wheat harvested area and production at 300 thousand hectares and 1.1 million MT, down approximately 3.0 percent from the MY 2022/23 USDA official estimate. Since 2015, the Wheat cultivation area has decreased by 2 to 3 percent annually. The post also estimates the MY 2022/23 Wheat harvested area at 310 hectares and production at 1.1 million MT.
The nation’s Wheat imports fell for the third consecutive year, suffered by falling consumption for high prices and banks’ sluggishness in opening letters of credit (LCs) amid the US dollar crisis. Wheat arrival declined 3.4 percent year-on-year to 38.75 lakh tons (lakh=100,000) in fiscal year (FY) 2022-23 from 40.12 lakh tons in the previous year, according to data from the food ministry.
The FY23 import of grain, for which Bangladesh is highly dependent on the international market, was the lowest in eight years. With the drop in Wheat imports, overall imports of food grains by Bangladesh’s public and private sectors declined to 49.30 lakh tons, down 1.38 percent from the previous year. Anup Kumar Saha, Executive director of Akij Insaf Group, said Wheat flour consumption has reduced amid high prices. “This has impacted imports,” he added.
Food Ministry data shows that public sector imports edged up in the last fiscal year, but private imports dropped nearly 8 percent to 31.95 lakh tons in the July-June period of FY23. Wheat prices soared in the international market amid a supply crunch after Russia invaded Ukraine in February last year. India’s ban on grain shipments in May of the same year aggravated the situation.
According to AgFlow data, Bangladesh imported 1.0 million tons of Wheat from Russia in Jan – July 2023, followed by Ukraine (0.67 million tons), Romania (0.48 million tons), Canada (0.3 million tons), Australia (50,000 tons), and Brazil (47,700 tons). In 2021, Bangladesh imported Wheat worth USD1.92 billion, becoming the world’s 8th largest importer of Wheat. In the same year, Wheat was Bangladesh’s 4th most imported product. The leading supplier was India, with a trade value of USD 1.03 billion. The following 2 big suppliers were Canada (USD 257 million) and Ukraine (USD 192 million).
Importers said grain prices began to drop in later months, but local consumers could not take full advantage because of reduced imports and the high cost of the US dollar resulting from the depreciation of Bangladesh’s taka. Wheat flour prices stood at Tk 46.50 per kilogram in June, higher than the same month a year ago, according to data from the Food and Agriculture Organization. “The main reason for reduced import is an erosion of people’s purchasing capacity,” said Md Aminul Islam, Managing director of Nabil Group, one of the largest Wheat importers.
The director informed that industries are Wheat’s primary users, and their usage to make Wheat-based food, such as biscuits, has declined. “Once, they would maintain stock for up to three months. Now, stockholding has reduced to 15 days,” he added.
Business people are talking about two reasons for this decrease in imports. One is that despite falling prices in the international market, there is a massive drop in demand due to the lack of stability in the dollar exchange rate, the credit crisis, and the rise in Wheat prices in the country.
Chaktai-Khatunganj Artaddar General Traders Welfare Association reports: “This time, the import of Wheat was limited to a few large industrial groups. As small traders could not import, they had no role in the market. As a result, the market was under the control of big traders, so there was no opportunity to reduce the price.”
Feed Wheat Consumption
The poultry, aqua, and cattle feed industries in Bangladesh use Wheat, to some extent, as a feed ingredient. Industry contacts note specific types of animal feed contain approximately 5 percent Wheat and Wheat bran. Sometimes the feed industry uses Wheat bran and rice bran alternatively. Cattle farmers also feed Wheat bran separately. For MY 2023/24, Post forecasts feed consumption of Wheat at 250 thousand MT on increased supply in the market.
For MY 2022/23, Post lowered its estimate of feed and residual use of Wheat to 200 thousand MT, down fifty percent from its previous projection. The current feed and residual use estimate are equal to the USDA official number. Due to high prices, Bangladesh’s overall demand for poultry and cattle feed has fallen significantly in MY 2022/23. Post contacts also noted that commercial feed companies significantly reduced Wheat inclusion in their feed formulation, while small cattle farms are still using some Wheat and Wheat bran to make home-based feed.
Higher CFR Offers
Argentina offered the highest CFR price, USD 421 on average, followed by France (USD 374), the US (USD 373.9), Germany (USD 363.5), Brazil (USD 355), Australia (USD 307), Russia (USD 293.5), and Ukraine (USD 265.5). Argentina, France, Germany, Russia, and Ukraine all offered Bangladesh a higher CFR than China. US Wheat CFR has been falling since January while Brazil’s was growing and falling.
Wheat prices have also risen since April 2022 due to the supply shortage. In February 2023, retail and wholesale prices of Wheat were BDT 56.85 ($0.53) and BDT 54.1 ($0.51) per kilogram, respectively, up over 80 percent from the same period last year.
In A Nutshell
Primarily, Bangladesh chooses the lower CFR of Russia and then purchases large volumes of Wheat. Russia ships Wheat to Bangladesh from their Novorossiysk and Kavkaz ports in the Black Sea basin. Russian Wheat travels relatively short distances through the Mediterranean, Red Sea, and Arabian Sea to reach Bangladesh, compared with other suppliers. The proximity and lower price are key trade stimulators in the Russia-Bangladesh Wheat trade relations. The following significant Wheat flows come from also Black Sea countries: Ukraine and Romania. Canada led other trans-continental suppliers by volume.
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