China garlic market analysis: Reduced surface area gives hope for price rise in 2019
The price of garlic reached its lowest point in 10 years; some farmers suffered losses of more than 1 thousand yuan [145 USD] per 0.07 hectare. People have lost their enthusiasm for garlic plantation under these market conditions. Few larger farmers planted garlic in similar quantities as last year. Shandong transported large quantities of garlic seeds to Henan in previous years, but that volume also clearly diminished this year. Even though the price of garlic seeds is low, which lowers the overall cost price of garlic plantation, still the enthusiasm of farmers for garlic plantation remains low.
The Chinese garlic export market is doing well this year because the garlic price is low. The export volume only increased during November and December and did not decline. This in turn provided some relief for the domestic market, which is under a lot of pressure at the moment.
Garlic storage diversifies
It was difficult in the past to store garlic in China. Traders with storage kept their stock until winter or spring at the latest. Nowadays, however, refrigerated storage technology enables traders with storage to keep garlic for up to two years and still compete with fresh garlic. In addition, processing technology can produce dried garlic. This diversification of storage methods allows the garlic market to survive short-term impact. As the production volume will decrease next year, the price will then rise again.
The market conditions are likely to improve next year and it is therefore worth looking forward. However, the price does not necessarily show great improvement. First, the production volume was excessive this year and the surplus will supplement the market next year. Second, long-term observation shows that the year after the price dropped never shows an abrupt reversal of market conditions, but at best a gradual, slight improvement. Third, the demand volume and supply volume are relatively small each year, and therefore susceptible to speculation. This speculation, however, also has a short-term impact on the market, and not a mid- to long-term impact. The overall market conditions next year will still depend on the balance of supply and demand.