Since early April, ginger prices in China have surged notably. The cost of raw materials jumped from ￥5.4/kg to ￥9.4/kg in just two weeks, marking an increase of over 70%. Although prices have seen some stabilization recently, they continue to experience minor fluctuations.
Mr. Ye Qiaowei from Fujian Xianxianhui Trading Co., Ltd., a company specializing in the domestic and international trade of ginger, attributed the price hike to a couple of factors. "One contributing factor is the lower yield and limited stock from last year's harvest. With still half a year to go before the new harvest in the northern production regions, about 60% of the existing inventory has already been sold. This scarcity has escalated prices. Additionally, market speculation plays a role. Considering the high purchase prices at the end of last year, the current favorable market conditions have led to the premature release of ginger stocks, thus causing market fluctuations," explained Ye.
The spike in prices has impacted sales negatively. Domestic sales have dipped below last year's figures, and although exports have seen a slight improvement, the impending entry of Brazilian and Peruvian ginger into the market in June is expected to reduce the demand for Chinese ginger globally. "Should the high prices persist, meeting market demand will become challenging," Ye remarked.
He highlighted the European market to illustrate the impact: the price for a 13kg box of ginger in Europe has escalated from 19 euros to 25 euros, which customers are finding hard to accept.
Looking ahead, Ye speculated that ginger prices might either plummet in September as farmers offload their stocks for the new harvest or witness another surge in July-August if a rapid sell-off leads to depleted inventories. "The market's short-term trajectory is still uncertain with various predictions," he noted.
In terms of strategy, Ye mentioned that to mitigate risks, his company plans to sell off its current inventory and thereafter only accept orders at agreed prices to ensure delivery.
Furthermore, Ye shared insights into ginger cultivation trends. "Brazil is expanding its ginger cultivation area with the new season's crop showing promising quality, enhancing its competitive edge. Meanwhile, China began increasing its ginger planting area last year, with production expected to rise in the coming years."
Currently, the market is not only dealing with northern ginger stocks but also with the sales of Guangxi white ginger and Yunnan turmeric.
Ye Qiaowei