Chinese ginger supply is significantly smaller than last year

The Chinese market supply is significantly smaller than last year as a result of the outbreak of COVID-19 and the subsequent imposition of isolation measures in February and March. Here are various perspectives on this development:

Domestic buyers
Chinese market demand significantly declined in the first quarter of 2020 as a result of the COVID-19 pandemic. Although trade has resumed, many end-markets are still moving at a much slower pace than usual. Buyers are not eager to purchase, which puts pressure on the price of products. The domestic market is depressed and consumer demand is weak.

Processing factories in the export market
Compared to the first two months of last year, ginger export declined by 9.15% in the first two months of this year. The volume of orders from overseas clients declined because of the outbreak of COVID-19. Some factories have temporarily halted processing because of a lack of orders. Although ginger export to Russia stimulated the domestic ginger price to some degree, in general the export of ginger to overseas markets has only a limited influence on domestic market conditions.

Traders with storage
Traders with storage space generally purchase fresh ginger from production areas in Changyi and Qingzhou in March and April to stock their warehouses. This year, however, they are only buying small volumes. Although their purchases have slightly pushed the price up in some production areas, in general their purchases have little impact on the market.

Domestic market demand is not strong enough to keep the price high. The only way the price can reach the same level as last year is if traders with storage suddenly purchase large volumes of ginger, or if overseas markets greatly increase the volume of orders. This ginger production season is almost over. Relevant data shows that the overall surface area devoted to ginger plantation continued to expand this year. Furthermore, the price of ginger seeds remains high. This could lead to even greater uncertainties in the ginger market next year.

Source: jiang7.com


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