The price of Chinese garlic has hit an all-time record this year as speculative investors in China buy up volumes of an already short crop and artificially inflate its value.
Traders in China and Europe quoted FOB prices of US$2,800 and US$3,000 per tonne when interviewed by Fruitnet.com last week (April 6). New-season product typically costs US$800-1,000 per tonne, one European importer said.
'It has been insane this year. I have been importing Chinese garlic `into Europe` for 18 years and I've never seen it like this,' Johannes Lachi, purchasing and sales manager at Exotimex - a leading Chinese garlic importer - told Fruitnet.com.
Wealthy individuals in China have bought up garlic stock with the intention of selling it once prices peak.
Speculating on agricultural commodities like garlic and ginger is a common practice in China, but this year was extreme, according to Mr Lachi.
'This past season it seemed like everyone was getting into Chinese garlic,' he said. 'It's not produce traders doing it, but rich businessmen.'
Speculators hoarding garlic exacerbated an already difficult supply situation this season. Some pundits claim the 2010/11 Chinese garlic crop was down 30 per cent compared to 2009 due to drought.
'Now there is very little pure white garlic left on the market,' Song Tao, general manager ofpeeled garlic exporter Laiwu Evergreen Foodtold Fruitnet.com.
The supply and price situation is expected to ease from late-May once growers start harvesting new season garlic.
'Good volumes have been predicted, so we expect the price to drop in the new season,' Mr Lachi said.
Chinese growers have increased their garlic plantings following two years of high prices, so 2011/12 production should rise, he explained.
'We're just waiting for the new season,' said Mr Lachi. 'The new crop should arrive in Europe by mid-June.'
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