KUALA LUMPUR (May 7): Malayan Flour Mills Bhd (KL:MFLOUR) is seeing higher energy and logistics bills though the staple food producer said a stronger ringgit is cushioning the cost pressures.

Grain shipments from the US, Australia, Brazil and Argentina for Malayan Flour Mills are not directly affected by the conflict raging in the Middle East, according to managing director Teh Wee Chye. However, procurement costs have swelled from rising prices of oil and freight, he noted.

“This situation here is not about wheat [shortages],” he told The Edge after the company’s 60th Anniversary celebration on Thursday. “It’s about the shortage of crude oil globally.”

Wheat accounts for about 75% to 80% of flour production costs for the company. Corn and soybean meal make up roughly 65% to 70% of broiler production costs for Malayan Flour Mills that also runs poultry farms.

The benchmark wheat futures traded on the Chicago Board of Trade have gained 20% year-to-date with the Iran war now in its third month. The US has blockaded the Strait of Hormuz while Iran has threatened to deploy mines in the waterway critical for global flow of everything from oil to metals.

The ringgit, which has risen nearly 8% over the past one year, is helping the company’s import cost, said Teh. The appreciating ringgit “helps us a lot in terms of food inflation,” he said.

Thursday’s event was also marked by the launch of Malayan Flour Mills’ ready-to-eat product range featuring microwaveable chicken-based meals including satay, ayam masak merah, ayam kicap and ayam kam heong, as part of its downstream expansion strategy.

Teh said the move would boost profits though any contribution would be small for a start. The products will initially be launched through an exclusive three-month partnership with Lotus’s Malaysia beginning May 21, before being distributed to other retailers.

Shares of Malayan Flour Mills were unchanged at 57 sen at 3pm on Thursday, giving the company a market capitalisation of RM706 million.