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China: Garlic price not likely to recover in the short term

After New Year the price of garlic showed an increase, but it only lasted 10 days before it dropped again. The price of medium-grade red skinned garlic from Shandong and Hebei has recently been at 1.9-4 yuan [0.30-0.63 USD] per kg. Based on the price merchants pay for the garlic they put in storage, 4.6 yuan [0.73 USD] per kg, the cost of storage comes to 0.6-1 yuan [0.09-0.16 USD] per kg. In reality, however, these merchants operate at a loss.
From 2015 until the first half of 2017 the price of garlic remained  high and merchants with stored products benefited richly. In the second half of 2017, at a time when new garlic entered the market, the majority of merchants with storage still purchased garlic at a high price. At that time the price was still rising and so was the enthusiasm of the merchants. However, when the garlic from refrigerated storage was ready to sell, the supply was relatively abundant. Supply exceeded demand. This turned the market upside down, and it became difficult to sell stored garlic at a higher price than it cost when it entered storage. At the moment it is extremely difficult to sell garlic at a price that makes a profit.

The garlic market is not stable. One week the price is rising, then it remains stable for two days and drops again. Purchasing merchants do not dare to trade in large volumes. Although it is already time to have products in stock for New Year, the majority of merchants with garlic in storage hope to benefit from the period before Spring Festival when retail is relatively quick. If merchants in production areas and merchants with storage cooperate, then perhaps there will be a limited price increase.
Source: sxrb.com--Shanxi Agricultural Daily

Publication date: 2/13/2018


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