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China: Apple market may continue to be oversupplied

At this stage, the overall price of apples on the Chinese market is relatively low. Insiders said that the low prices of individual origins are mainly due to poor product quality. Continuous rainfall has caused poor coloration of early-ripening Fuji apples in most production areas south of Yan'an, and the fruit surface has no brightness, and even turned green with water cracks. At the same time, the overall size of this year's early-ripening Fuji apples is smaller than in previous years, and merchants are cautious so the prices of such products have fallen rapidly. However, the price of good produce is relatively stable, and the enthusiasm of customers to purchase is good.

Looking ahead, Xue Xiaoguo, manager of Luochuan Sunshine No.1 Fruit Industry Co., Ltd., in Yan’an believes that there is a high probability that the price of late-ripening fruit will be low this year, which is mainly based on three aspects: First, the problem of the merchants. Last year, most sellers who stocked goods had different losses, with an average loss of 2.0-3.0 RMB/kg, so that the number of early-ripening Gala apple buyers in the Shaanxi producing area decreased by 30% this year. Last year, the average price of different early-ripening fruits in Shaanxi was RMB 5.6/kg, which was related to the slight reduction in production last year, but this year's average price was RMB 4.0-4.4/kg, which is related to the restoration of supply this year. It is expected that late-ripening Fuji and early-ripening apples have something in common.

The second is the issue of capital. Early-ripening Gala apples and early-ripening Fuji apples are pay-as-you-go. Generally speaking, there is no situation of out-of-season storage and occupation of excess funds. However, at least 40% of late-ripening Fuji apples need to be put into storage for off-season sales, occupying a huge amount of capital to operate, and the funds for normal inventory are more than 700,000 RMB. Last year, many cold storages already had financial problems at the end of the period. It is expected that the financing costs of cold storage will increase this year and the scale of financing may shrink. Finally, it is the issue of products. Last year, the western production area recognized a 20% reduction in production, and this year the supply has recovered.


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