As we step into October, China is in the midst of its ginger harvesting season. While ginger prices within China remain high, this begs the question for exporters: How long can the highs last?
Due to various factors, including the pandemic's aftermath, unfavorable weather conditions, and other issues, the prices for Chinese ginger exports have bewildered the market and resulted in significant losses for many exporters. According to data from the Ministry of Commerce of the People's Republic of China, consider the prominent Beijing Xinfadi Wholesale Market. In the first half of 2023, ginger prices soared from 11.44 RMB ($1.57) per kilo to a staggering 17 RMB ($2.33) per kilo. In contrast, during the same period the previous year, prices fluctuated between 5 RMB and 3.3 RMB per kilo.
"We exercised extreme caution in the first half of 2023," explained an industry insider. "The rapid increase in ginger buying prices forced us to keep minimal inventory, just enough to maintain the minimum orders and reduce price risks. Many packing houses even chose to halt operations to limit their losses. The sharp rise in buying prices not only affected exporters' profits but also had a significant impact on their cash flow management. Those who continued to fulfill orders had to explore alternative strategies to maintain financial stability."
Due to the substantial increase in domestic prices and a less active global export market, ginger exports recorded a substantial decline of 45.28% in volume from January to July compared to the previous year, as reported by Chinese Customs Data.
Wang Xiaohai, Chairman of Fengyang Farmers' Specialized Cooperative, expressed optimism driven by several factors. Favorable weather conditions have boosted ginger cultivation, while the anticipation of higher returns has incentivized farmers to increase their investment in ginger farming, aiming for greater yields and expanded ginger crop cultivation.
However, domestic ginger prices remain persistently high. As of October 9th, the wholesale price at Beijing Xinfadi remains at approximately 17 RMB per kilo. Fresh Ginger at a Shanghai Supermarket: Priced at 9.90 RMB for 300g (Equivalent to 1.31 Euros for 300g)
"We are exercising prudence with our ginger stock," noted Yao Changfeng, General Manager of Onedayone Group Yantai. "In my view, the current high prices lack the solid support of strong demand; they are simply following the momentum of previous price increases driven by supply and demand imbalances. The ginger currently traded in the market largely comprises last year's stock. When this year's new crop ginger hits the market, expected in November, we anticipate a correction in ginger prices."
The rising ginger prices have attracted numerous speculators aiming to profit from buying and selling ginger. "There are too many people trying to get a piece of this pie, and many of them lack expertise in quality assessment and proper storage practices," Yao stated.
For more information:
Maggie Peng
Onedayone Group
Tel: +86 187 17865462
Email: [email protected]