Wheat Price Slightly Drops... Consumer Flour Price Reduction Announced (Comprehensive)

CJ CheilJedang to Cut Prices by an Average of 6.6% Starting Next Month
Samyang Corporation and Daehan Flour Mills Also Reviewing Timing and Rate of Price Reductions
Government Pressures for Price Cuts on Sugar, Cooking Oil, and Others
Additional Price Reduction Requests Possible for Manufacturers Using These Raw Materials

Major flour manufacturers such as CJ CheilJedang, Samyang Corporation, and Daehan Flour Mills are joining the government's price stabilization efforts by lowering the prices of consumer flour products. This reflects a slight decrease in the price of imported wheat, the raw material used in flour production.

The first to announce a price reduction plan was CJ CheilJedang, the market leader. On the 19th, CJ CheilJedang announced that it will reduce the prices of consumer flour products starting from the 1st of next month.

A consumer is looking at displayed flour at a large supermarket in Seoul city. [Image source=Yonhap News]

The products with reduced prices include three types: 1kg and 2.5kg of all-purpose flour and 3kg of flour for frying. The reduction rate ranges from 3.2% to 10% based on regular prices at large supermarkets, with an average reduction rate of 6.6%.

CJ CheilJedang stated, "We decided to lower prices to reflect recent international wheat market prices and actively participate in the government's price stabilization policy," adding, "We hope to contribute even a little to stabilizing grocery prices."

Flour for frying and all-purpose flour are products commonly used in households, accounting for more than half of the total B2C (business-to-consumer) sales volume.

The background for CJ CheilJedang's decision to reduce prices on some flour products is interpreted as reflecting the decline in the price of wheat, the raw material. According to the Financial Supervisory Service's electronic disclosure system, the price of imported wheat by CJ CheilJedang in the third quarter of last year was 538,000 KRW per ton, about 3% lower than the peak of 554,000 KRW per ton in 2022.

According to market research firm Market Link, CJ CheilJedang held a 58.81% market share among domestic flour manufacturers last year, ranking first. Following the price reduction policy of the industry leader, competitors are also showing signs of joining. Samyang Corporation and Daehan Flour Mills are already discussing whether to reduce prices on consumer flour products. An industry insider said, "We are reviewing details such as the specific timing of the price reduction announcement and the reduction rate."

Samyang Corporation's imported wheat price last year was $380 per ton, down about 13% from $435 the previous year, and during the same period, Daehan Flour Mills' imported wheat price slightly decreased from 528,868 KRW per ton to 506,090 KRW per ton.

Earlier, on the 13th, the Ministry of Agriculture, Food and Rural Affairs requested food industry stakeholders at a meeting to "flexibly reflect changes in international raw material prices in product prices and cooperate in stabilizing prices."

Additionally, the government is pressuring price reductions based on the fact that raw material prices for other items such as sugar and cooking oil have also fallen. On the 6th, Choi Sang-mok, Deputy Prime Minister and Minister of Strategy and Finance, pointed out at the 'Price-Related Ministers Meeting' that "Although international grain prices have dropped by about half compared to the peak in 2022, this has not been properly reflected in food prices such as flour and cooking oil, causing high inflation." There is also a possibility that manufacturers producing products using these raw materials, such as ramen, confectionery, and bakery items, will be further encouraged to reduce prices under the pretext of lowering flour prices in the future.

However, B2B (business-to-business) flour products are excluded from this price reduction. An industry insider explained, "Flour provided to corporate clients has different contract timings and conditions for each company, making it difficult to uniformly adjust prices."