Chinese garlic market will remain weak in the short term

Chinese garlic price is under pressure

The price of Chinese garlic from cold storage stabilized in November, with only small fluctuations. There are several reasons for this development: first, the market price of garlic is closely related to the cost price of garlic. Traders speculate in the garlic market on the basis of the cost price. Second, supply and demand are balanced. Outside influences are too small to make a significant difference.

Key factors that will influence the garlic price during the rest of the sales season are weather changes, demand during New Year and Chinese Spring Festival [12 February, 2021], and the Covid-19 pandemic. These are all long-term factors. First, the first cold wave of the year arrived on 12 December. The temperatures in north China suddenly dropped. In some areas the temperature dropped by 6℃ to 14℃. However, garlic is a durable plant and the short-term temperature decline did not have a significant impact.

Second, the holidays are almost here. New Year is less than 20 days away and Chinese Spring Festival is only 2 months away. Domestic market demand always grows stronger in anticipation of the holidays, but this development has weakened in recent years. Third, the Covid-19 pandemic continues to grow stronger across the globe. Even though the situation in China is fragmentary, restaurants are still on high alert. This affects the consumption volume of garlic.

Furthermore, there are some issues in the shipping industry. There is a shortage of shipping containers and the shipping cost is rapidly rising. Although the situation is improving, the high shipping cost and the high exchange rate of the Chinese yuan both dampen the enthusiasm of overseas buyers. Chinese garlic export has slowed down and some buyers even canceled their orders. The shipping cost is unlikely to significantly decline before Chinese Spring Festival. The shortage of shipping containers will not be completely resolved before then either, nor will be the lack of available cargo space.

The price of cold storage garlic has been weak for a long time. The trade season is growing shorter and traders are eager to sell their stock. Many sellers will wait until Chinese Spring Festival, but some already release their stock now. They can not sell all of their garlic during the peak sales period, and there is a significant risk that the price will drop after Chinese Spring Festival. All of these developments put pressure on the price of Chinese garlic, and the market will remain weak for the foreseeable future.


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