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Garlic prices in May drop following export cold spell during the first quarter
Transitioning to May, fresh garlic—from the main garlic producing region of Henan—is coming into season. This marks a transition for China’s domestic garlic market. Fresh garlic and garlic sprouts are steadily gaining popularity. Demand for refrigerated garlic, on the other hand, is diminishing. During April, the domestic price of garlic peaked, resulting in an 11%decrease in garlic exports. In May, the price of refrigerated garlic has since dropped by 40%. The price of fresh garlic hitting the market is low. Procurement prices of fresh garlic are between 3 and 3.4Yuan (USD 0.43 to 0.49) per kilogram.
The price of refrigerated garlic in April remained as high as 20 Yuan (USD 2.9) per kilogram. Garlic from Yunnan that entered the market in April did not influence overall market prices because of its limited production. Henan garlic is coming into season this month. Ahead of this, the purchasing price of fresh garlic dropped from 5.2Yuan (USD 0.75) per kilogram to 3.4Yuan (USD 0.49) per kilogram in late April. Likewise, the price of refrigerated garlic also dropped rapidly. Recently, the price of garlic in Jinxiang markets, China's largest market for refrigerated garlic, ranged from10.6 to 11.6 Yuan (USD 1.54-1.68) per kilogram. The price of Indonesian garlic exports ranges from 10.6 to 11.2 Yuan (USD 1.54- 1.62) per kilogram.
Price correction of refrigerated garlic is an inevitable trend of introducing fresh garlic to the market. Since last year, the area of garlic planting has grown 10% and realized a yield increase of 5%. As a result, total garlic production has increased by 15%. Refrigerated garlic supply will surpass 3 million tons in autumn. By the end of May 2018, refrigerated garlic is estimated to have a surplus of 600,000 tons.
This year's garlic market has two distinct features. The first is production increases. The second is surpluses of refrigerated garlic. Last year, the price of garlic peaked at 10 Yuan (USD1.45)—an unlikely price for garlic this year.
Garlic exports remained weak during the first quarter. Total exports of refrigerated and fresh garlic were 32.47 million tons, down 11% year on year. The decline in exports is mainly due to the high price of garlic in domestic markets. The unit price of garlic exports rose 28.9% in the first quarter year on year. However, data suggest a downward trend in recent months. The average export unit price was USD 2014.9 per ton in January, USD 1960.47 per ton in February, and USD 1857.96 per ton in March. Compared with second quarter prices of previous years, the unit price of garlic exports is predicted to remain unchanged or to slightly increase. Garlic exports are expected to gradually come out of this cold spell and reach 1.95 million tons, an increase of about 15% year on year, in the second half of 2017.
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