After the surface area devoted to garlic plantation greatly expanded last year, the garlic production volume massively increased this year. Fortunately, for garlic farmers, the garlic has not become unmarketable, but the price did reach its lowest position in the last 10 years. Since the low garlic price reduces the cost price of garlic storage, many traders with storage have come out to purchase stock, which created a brief period in which supply did not meet demand. Suddenly the storage is completely full and traders are worried that when warehouses start to sell garlic that the market will become as bad as last year. The price of garlic in cold storage is already at its lowest position in years, but traders with storage still say that the market is better than last year. Why is this?
Cold storage garlic
The highest price of garlic stored in Jinxiang cold storage does not exceed 2 yuan [0.29 USD], while the lowest price is around 1.2 yuan [0.17 USD]. These prices are definitely lower than last year around the same time. Even though the price seemed to decrease all the time, it still stayed upward of 2 yuan [0.29 USD]. It is for this reason that most people think the market this year is worse, but traders with storage disagree. The price of stored garlic was high last year, above 2.5 yuan [0.36 USD] on average, though by November it dropped to 2 yuan [0.29 USD]. Even though the price was higher last year, traders with storage still lost money. Even though the price of garlic in cold storage is high this year, the price of garlic at the time it entered storage was only 1 yuan [0.14 USD], which means that traders with storage the difference is still large enough to make a profit.
Garlic packaging
Even when the price of garlic showed an upward trend last year some garlic remained unmarketable, and traders held on to their stock until spring. The sudden influx of garlic in the market lead to excessive supply and depressed market conditions. The stable market conditions this year follow the sales enthusiasm of traders with garlic in storage. It is therefore important that they continue to bring garlic on the market at a steady pace, but if they speculate and wait for the greatest profit margin, then perhaps the market will repeat last year's disaster.
Source: Agricultural Observer