Keming Foods, a leading noodle manufacturer, announced it raising prices by another 5%. In December 2021, the company hiked its prices for the first time in 8 years and earlier this week the company reported strong H1 2022 profits as consumers in lockdown bought more noodles for consumption at home.
In its announcement, the company said it was raising prices “in view of the excessive increase in wheat prices.”
The company said the price hike could have an impact on the company’s sales, however since noodles are one of the cheapest food options, demand should be relatively inelastic.
The company’s most popular noodle products typically retail for between 10-11 RMB (1.48-1.63 USD) per kilogram of dried noodles.
Flour mills are less active in the market at the moment. Summer is typically a seasonally weaker period for flour demand and farmers are also holding onto more of their high-quality wheat in hopes better prices after the rally over the past year.
This could cause quality issues in the future as farmers’ storage facilities can often have more issues with moisture and rodent damage. A member of China’s Academy of Sciences noted that more farmers are storing grain this year, with an estimated 24% of farmers in Henan storing over 50% of their wheat production.
In the past, losses for grain stored on-farm in China has averaged between 2-4%, compared to losses of 0.5% at grain storage facilities.