The month of December is typically the most popular period for Chinese ginger exports. However, demand volumes have decreased in this year. Fujian Xinxianhui Trading Co., Ltd. is a firm that is involved in both the national as well as international ginger trading suffers from this drop. “This year, production of ginger has grown both in the country as well as internationally. Nearby countries like Thailand, Vietnam, and India have been able to compete with India because of their low costs for raw materials. This is the main reason that has led to a decrease of export orders” explained Ms. Ye Qiaowei of the firm.

Organic ginger (All photos are of natural ginger)

The increased production has resulted in Thai ginger appearing as lower than Chinese ginger on the market for foreign trade this year. This has meant that a lot of customers from countries like Europe as well as Pakistan have been shifted towards Thailand. In the same way, India and Vietnam are witnessing an increase in orders. In the past, Pakistan and the Middle East are the most important market for Chinese ginger. However, the changes have a significant impact on demand for exports in the current season. In addition, Brazil, which saw an impressive market performance this year, is set to boost its production to a greater extent. This could put further pressure on prices in the world.

When discussing the state of the market to prepare for the ginger harvest for the new ginger season, Ms. Ye noted: “Both the area of planting and yield per hectare are up substantially this year. In Shandong as an example it is expected that production will rise by between 30% and 50 percent compared to the previous year. Overcapacity is putting pressure on the market, which is causing prices to fall earlier in the season. Storage businesses have been slow to buy more.”

“In the northern regions of production Early-season prices were to be too high. The current prices have decreased around 25% up to a range of Y=4,500 to Y=5,000 which has resulted in massive losses for a lot of early market players. Southern regions of production face the same situation price spikes initially however, they have fallen since an increase of supply. Our focus has been on getting into the market at midstream rates.”

Unusual circumstances have emerged in the Northeast producing regions this year. Ginger’s qualifying rate exported to Europe is drastically reduced from 70% in prior times, to just 20 20%. “This has led to a number of storage businesses reluctant to buy ginger grown in this area,” Mr. Ye said. The main reasons are heavy rain in the middle of growth as well as insufficient temperature variations throughout harvest. These factors has reduced the amount of starch in the ginger.

He also said that Mr. Ye expressed a pessimistic future for the ginger market the coming year. “Based on the current demand-supply dynamics the prices may plummet after the emergence of next season’s harvest. For foreign trade, businesses that have a stock of southern ginger that meets high-quality requirements and has a cost advantages will prevail on the market. We will adjust our strategy in line with market conditions, buying southern ginger only if prices for raw material are less than the Y-value of 4,000 and avoiding large-scale storage. Then, in March next year when the stock is exhausted, we’ll make purchases on the basis of customer requests as well as the current economic conditions.”