Ginger Prices in China Crash Prior to 2021 Harvest

Published 2021년 10월 20일

Ginger harvest in the Shandong region of China started in October and as a result of favorable weather conditions the quality and quantity of ginger harvest are expected to be better than the previous season’s China’s exports fell down dramatically in the last few months due to supply chain disruptions which resulted in increased ginger stocks with the local traders. A good harvest and piled-up stocks are likely to push down the ginger prices in China in the coming weeks. Furthermore, increased production volume this season is going to increase the ginger reserves furthermore and push down the prices. China can overcome this glut by exporting ginger to markets in ginger-demanding countries at competitive prices.

China's ginger cultivation is spread across roughly 30 thousand hectares, mainly in Shandong province. Shandong accounts for 66% of the total area and has a 75% share in Chinese ginger production. In October, the ginger harvest season in China begins and by the second week of October, freshly-harvested ginger begins to enter the Chinese market. The peak period of the ginger harvest in Shandong reaches in the middle of October. The weather conditions have been excellent throughout the year in ginger growing regions with limited rainfall and no natural disasters which have a negative impact on the production cycle. Both farmers and traders have a positive outlook regarding the quality and production volume of ginger in this season. It is expected that there will be a surplus of ginger supply in the Chinese markets as stocks.

Ginger trade in Chinese wholesale markets is relatively slow at the moment due to locked ginger stocks with the local traders. Due to COVID-19 outbreaks, traders quickly bought large volumes to prepare their stock for a prolonged interruption of the supply chain resulting in stockpiles of ginger. Furthermore, Chinese imports and exports were hindered by a number of factors, including the rising price of shipping, backlogs in destination ports, the appreciation of the Chinese yuan, US dollar inflation, and recurring outbreaks of COVID-19. During the first four months of 2021, China’s ginger exports fell by 31.7% compared to the same period last year.

Due to high stocks in domestic markets of China, pressure on the Chinese ginger industry was created due to which the prices crashed in the market. The price of ginger has fallen down dramatically from USD 2.42 per kg in October 2020 to USD 0.84 per kg in 2021 which is a 65% fall in prices. Even though the price of Chinese ginger has been falling since January, in the last 6 months, the prices have dipped at a faster rate. The harvested ginger is yet to come into the market as it requires one month of sun-drying and processing which will further push down the prices.

Source: Tridge. Price Charts.

In the coming months, China has the ability to capture the booming demand for ginger in Europe, Canada, and Thailand. Given the large volumes and competitive prices, China can cover up the setback it faced during the first half of the year in ginger export volumes. Cargo space is now more readily available than last month, but the shipping price is still high which is creating uncertainty in the global ginger market.