China (Hohhot): Rising ginger prices expected to continue

Hohhot City Business Bureau monitoring data shows that recently Hohhot ginger prices are rising rapidly. This month (March) the wholesale price is 11.37 yuan/half kg, with an increase of 20.57%. Ginger normally enters the market in October and it is expected that ginger prices will continue to rise until that time.

Ginger wholesale prices were at 9.05 yuan/half kg in Jan.2014, while February’s wholesale price ended at 9.43 yuan/half kg, an increase of 4.2%. Ginger supply is currently low with high market demand.

According to the data from the business bureau, there are two reasons why ginger prices continue to rise in Hohhot City:

One is due to the fact that the city cannot cultivate ginger because of its climate and environmental factors, ginger mainly comes from Shandong and the price tends to fluctuate depending on the market. Last year, Shandong's largest producer of ginger, Weifang, had an incident with poisoned ginger. Authorities destroyed huge amounts of the poisoned ginger causing a significant drop in supply of ginger this year.

It appears that the second reason behind the price increase is due to hoarding. When ginger prices are high, merchants tend to hoard ginger and try to sell it at higher prices. As ginger can be kept for 2-3 years, merchants are under no pressure to sell and can wait comfortably for the prices to go up. And because of this, the market prices tend to be more difficult to predict.