Netherlands opting for South American ginger due to exorbitant container prices in China

Whole Ginger

Netherlands

Published Nov 18, 2021

The Chinese ginger harvest is coming in and wholesale prices have tumbled more than 50% year-on-year to as low as USD 650 / MT. Wholesale prices in Peru are slightly higher and in Brazil slightly lower. However, when transportation costs are added, Peru and Brazil are clear winners. The cost of sea freight from China to Europe in a 40-foot reefer container is as high as USD 12,000. This is at least double the cost of sea freight from Peru. China is entering its main export season, but if freight prices remain as they are, European buyers will most likely be sourcing from South America.

China, Peru, and Brazil’s ginger exports

Chinese ginger has long dominated the world market, making up 57% of all ginger exports in 2020 - a whopping 497,939 MT. While China still dominates world ginger exports, they seem to have reached a plateau with little changes over the last 5 years, averaging 492,070 MT.

Peru and Brazil’s ginger exports, on the other hand, are comparatively small, but are increasing rapidly. Peru exported 49,657 MT in 2020, up from only 10,662 MT 5 years ago. Brazil’s exports increased from 7,588 MT in 2015 to 31,712 MT in 2020.

Source: ITC Trade Map

Seasonality and Prices

The Chinese ginger harvest kicked off in October and nearly all ginger gets harvested before winter. This means a lot of ginger is coming to the market throughout winter and in spring.

Brazil’s main ginger harvest is over and their exports from July to September were huge, at 16,055 MT, compared to last year’s 10,305 MT. Peru’s ginger is available almost year-round, however the main production season is from June to December. This gives Peruvian ginger a slight advantage in autumn when their fresh ginger comes to the market, before that of China.

Source: Tridge

Since the volumes from Brazil and Peru are much smaller than that of China, it gets completely overshadowed by Chinese exports. Peru’s top export month to the Netherlands is in October, with a 5-year average of 1,590 MT. October is also Brazil’s top export month to the Netherlands at a 5-year average of 1,156 MT. China’s 5-year exports to the Netherlands in October is 4,965 MT, despite it only being the 6th busiest month in terms of ginger exports. This season, however, the Netherlands’ imports from Brazil are much higher than in previous years. From January to September, the Netherlands imported 8,288 MT compared to 6,409 MT over the same period in 2020 and only 3,585 MT the 5-year average.

Source: ITC Trade Map, ComexStat

*Chinese and Peruvian exports until July, Brazilian exports until September

The export price of Chinese ginger destined for the European market is as much as 50% lower than last year, trading at USD 670 / MT. As the harvest in China comes in, prices will remain under pressure. Peruvian ginger prices in the local markets in Peru are 53% down from last year, at only USD 690 / MT. Brazilian ginger prices are 67% lower at only around USD 650 / MT. However, keep in mind that these prices are wholesale prices. Transportation costs from these major markets to the port and then to Europe have not been added yet.

Source: Tridge

Excessively high cost of reefer containers from China

The costs of reefer containers from China are completely out of proportion with that of South America, which means Europe will be taking a hard look at Peruvian and Brazilian ginger, according to Tridge’s engagement manager in Belgium, Frans Timmers. The cost of sea freight for ginger from China to Europe is as high as USD 12,000 / 40ft container. This is more than double the price of freight from Peru at only USD 5,500 / 40ft container. While the prices of containers from China are trending down, importing ginger from Peru and Brazil will still be cheaper with things as they stand. China has been losing its dominance in the ginger market slowly but surely, it could be accelerated by the absurd prices of transportation. India, Thailand, Peru, and Brazil, will be looking to cash in on the current situation.