How will the Chinese banana market develop after recent fluctuations?

The price of Chinese bananas in several production areas experienced significant fluctuations last week. The price rapidly increased early in the week especially in Hainan, Zhanjiang in Guangdong, and Xishuangbanna in Yunnan. The price of top-quality bananas exceeded 4 yuan [0.58 USD] per kg, with some prices exceeding 5 yuan [0.72 USD] per kg. The price maintained a high position for several days, but then market pressure increased, and the price began to fall. The rapid decline first occurred in Hainan, but Guangdong, Yunnan, and Laos quickly followed. The overall banana price is now stable.

Even though production areas and markets are distant, they are integrated. If the price of bananas in production areas rises too high, then the market cannot endure for too long. If the market price is too low, then the production areas shrink, and this feeds back into the market. A rapid price increase is therefore easily followed by a rapid decline until the price stabilizes. Banana production areas in southwest China are approaching the end of the production season. Supply from Guangxi has not yet entered the market in large volumes. The overall supply volume from Hainan and Guangdong is limited. The banana price is therefore expected to maintain at a relatively high position.


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