Flour prices to remain stable next year

Flour prices are expected to remain steady next year, after world harvests reached 683 million metric tons (MT) this year. Barring strong typhoons, a surge in energy prices, and a sharp hike in Chinese and Indian demand for flour, local prices will likely remain stable in 2010, Ric Pinca, executive director of the Philippine Association of Flour Millers, Inc. told reporters on Tuesday. Soft flour — used to make cakes, pastries and noodles — costs P650-P670 per 25-kilogram bag. Hard flour — an ingredient for bread and pandesal — costs P750 per 25-kilogram bag. Since 2007, flour prices have risen significantly, reaching P900 per 25-kilogram bag, as global wheat production fell. Two years ago, total wheat output was just at 615 million MT. At the same time, the group expressed concerns that oil prices may go up yet again. "Everything goes up when crude prices go up. Higher oil prices would mean higher freight costs that would translate to a significant increase in the price of traded commodities," Pinca said. The cost of transporting a metric ton of wheat to Manila from the Pacific Northwest have reached $100 as a result of rising oil prices. At present, transport costs, which account for 15-20 percent of the total cost of flour millers, stand at $40-$43 per metric ton. The Philippines, which imports two million metric tons of wheat, sources the commodity from the US, Australia and Canada. Sixty percent of imported wheat is used to make hard flour, while the balance is used for soft flour. — RJAB, Jr./NPA/GMANews.TV