When typhoon "Lekima" landed on the Chinese coast, Shandong province suffered from heavy rainfall. Jinxiang, the "hometown of garlic", saw the garlic price bounce back slightly during this rainy period. Previously, after the high point in June, the price of garlic reached this year's low point in July. The heavy downpour that followed "Lekima" washed away the last hopes of garlic traders. The weather conditions caused many traders who intended to sell their stock to dump their garlic on the market in large volumes. The market price continues to drop.
In recent days, the news of the rainy weather resulted in a growing demand for garlic. The price of Jinxiang garlic slightly recovered. Based on the current price, however, not even 50% of the traders, who stocked their warehouse with garlic bought when the price was at a low point, are able to make a profit. Traders who bought their garlic when the price was higher will likely face financial losses.
The price of garlic dropped to 1-2 yuan [0.14-0.28 USD] per 0.5 kg in 2018 because the overall production volume in 2017 rapidly expanded. Many farmers abandoned garlic altogether because their income was too low. This is the reason that the garlic production volume in 2019 declined and the price gradually recovered. Many farmers are hesitant to sell their stock. They are waiting for the price to rise. One trader from Pizhou in Jiangsu stated that the garlic trade volume in July declined by 70% in comparison with the same period last year. Traders are worried by the hesitation of farmers to sell their garlic.
The cost price of refrigerated storage is around 0.8 yuan [0.11 USD] per 0.5 kg. This means that traders who stocked their refrigerated warehouses with garlic bought at 5.5 yuan [0.78 USD] per 0.5 kg need to sell their products for at least 6.3 yuan [0.89 USD] per 0.5 kg to recover their investment. However, the current market development suggests that the price will not reach that level.
Source: Chinatimes.net.cn