China: Garlic price hovers near freezing point

Garlic is one of the ingredients on a Chinese table that people can not do without. In the investment market, a little bit of garlic can cause great ripples. The price of garlic went into a downward spiral starting from last year; the garlic price this year can easily be described as hovering near freezing point in comparison with prices during the "garlic trend" of the previous two years.

The price of garlic in the first half of this year was more than 20% below the average price in the annual first half of the last 10 years. The price of garlic reached a low point in June and then bounced back. The price slightly increased from July on.

There is around one more month left for sales of garlic from refrigerated storage. The price of garlic from storage is determined by product quality. Top-quality garlic is sold at higher prices, and the overall price started to increase from the beginning of October.

Even though the price of garlic only slightly increased, the cost price of garlic was relatively low when buyers stocked their warehouses, so that there is still plenty of room for profit. Some suppliers are eager to sell when they see the opportunity for profit, so they will avoid risk later on. At the same time, suppliers of old garlic are also eager to sell. This means that there is abundant market supply. However, the market suffers from a common phenomenon where "good products are difficult to buy, and second-grade products are hard to sell." The market is divided between top-quality garlic that sells well, and second-grade garlic with a price that hovers near the freezing point.

The garlic market experienced three major fluctuations since the second half of 2009. The price dropped in 2011, 2013, and 2017. The garlic price remains low in 2018. People in the industry state that the main reasons for the current low price are expanded production, an increase of production per hectare, and large garlic reserves in storage. Garlic is not likely to become a rare product anytime soon.


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