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GARLIC : OVERVIEW GLOBAL MARKET

An update from both ends ; producers and receivers

Speculation about Chinese stocks and damage to the crop determine the situation in the garlic market. In the worst case scenario, the price could rise even further. But there are also rumours that the damage is not that bad. In this case, and given the large stock, there could be significant price reductions. In the coming weeks, as the Chinese harvest kicks off, things will become clearer. In Europe, the season is also around the corner. In the coming weeks, the harvest will be starting in Ukraine, Greece, Italy, Spain and France. For its part, Spain is managing to capture an increasing market share in Europe.

China dominates world market

The new harvest is imminent. Next week, the first region will start, followed later by the rest. The new garlic will be harvested in early June, for example, in the Shandong Province. There is usually old garlic available when the new harvest begins. This year, this is not the case and many are waiting for the new harvest. Furthermore, there is said to be a lot of market speculation. Assuming these rumours are true, garlic prices will likely be expensive for some time. The cold has reportedly caused losses over the last few months; some figures speak of heavy losses, but there is yet no certainty about this.

In Shandong, it has been unusually cold for the last few months, resulting in about 10% to 20% of the crops not surviving the severe temperatures. Hainan expects a smaller harvest, about half of last year's. Calibres are very small and much of the garlic grown in this province is intended for the domestic market. Jinxiang is a large garlic producer and losses here are expected to reach 20%. In Laiwu, the production should be about 40% smaller. Due to these losses, prices are expected to increase. If it appears that there is too much speculation, the consequences for the market could be disastrous.

Chinese garlic prices are high this season. Other figures talk about a total loss of 20% to 25%. This estimate was released just before the Chinese New Year and caused prices to rise sharply in February. Exporters started speculating that a small harvest would entail higher prices later in the season.

At present, however, it seems the damage is not that bad. The government of the province of Jinxiang recently presented a report that reveals that only 2% of the harvest has been lost. There is still a lot of 'old' garlic in stock. Therefore, price declines are expected as soon as the new harvest hits the market.

Good demand Egyptian garlic

Egyptian exporters have started making direct shipments to Greece and the Czech Republic. In the past, these went through the Netherlands. This season there is much demand for Egyptian garlic, partly because Chinese garlic is expensive and the Spanish one has been of lower quality, says a trader. Russia and the Arab countries import a lot of garlic from the North African country.

The peak season for dried garlic starts in March and lasts until 30 June. From July, there is an additional charge of 9.6% for exports to the EU. Early June is always a challenge, since at that time Mexico, China and Spain come into the market. 

Ukrainian garlic wanted

A mild winter was followed by a rainy spring. While it is still too early to give a accurate estimate, a good harvest is expected. A Ukrainian company says they will harvest around 300 tonnes of garlic this year, an increase of 30% compared to the previous season. The greater part of this volume is intended for Ukrainian supermarkets, with some exports going also to Russia, but the latter are not great at the moment because of the current political situation. Due to the devaluation of the Ukrainian currency and the rising price of Chinese garlic, the demand for domestic garlic has increased. At present, the domestic production is unable to cover the demand and 70% of the garlic is imported from China. That equates to 4,000 to 5,000 tonnes. 

Spain stronger in Europe

Within Europe, Spanish garlic is gaining a more dominant position. For the next season, good yields and large sizes are expected. There are talks of a 20% growth. Brazil, among others, has shown its interest in European garlic, but the weather conditions will have an impact on the market. In Andalusia, the first region to start the campaign, temperatures at this time of the year normally stand around 25 °C. This year, the mercury has not gone above 20. The rain has delayed the harvest by 10 to 15 days, although there are no reports of losses or lower quality. The first harvest will hit the market in the first or second week of June. Prices are reasonable and have remained stable in recent months, despite the fact that demand collapsed in early May, mostly because the stocks are small. The acreage this year is slightly greater and good market conditions are expected, since the old stocks are already exhausted. No problems will consequently arise from the increased supply.

Spain mainly exports its garlic within the EU, although shipments also go to other destinations, such as Canada and Brazil, as well as to new markets, like Australia and Japan. Spain also imports from Argentina, Chile and Mexico.

France awaits start of the season

The garlic harvest has yet to start in France; therefore, there are currently only imports available. French dried garlic is expected to become available in July. Until that time, imports will continue arriving from Argentina and Mexico. The former supplies white garlic and the latter especially the purple. At this time, the quality of Mexican purple garlic is reaching its peak and that's reflected in the prices, which amount to around 4 Euro per kilo. Mexican garlic is slightly better priced than the Argentinian, which yields 3.80 Euro per kilo.

 Italy expects bigger harvest

The weather conditions will determine the market in the coming season. A trader says that the mild winter and early spring in Italy, but especially in Spain, will lead to delays in the harvest. The recent rainy period is expected to come to an end soon, so there should be no impact on the harvest, which is estimated to be 20% greater.

On the wholesale markets, there is fresh garlic from Egypt available. There is also some dry garlic from Italy, Spain, France and Argentina. Prices vary by trader and by product. In Rome, French garlic (size 60-80) costs 4 Euro, while fresh Egyptian garlic yields 2.40 Euro. In Turin, the French costs as much as 7.70 Euro, while the Egyptian stands at 2.25 Euro. The prices of garlic from countries such as Argentina, Spain and Italy oscillate between these extremes. In Verona, French garlic costs 7 Euro and there was no Egyptian supply by 12 May; however, there was some supply of fresh Italian garlic in bunches at prices of between 1.90 and 3 Euro.

Greeks look forward to start of the season

The Greeks are looking forward to the start of the new season, which will kick off in the coming days. With the start of the campaign, prices are expected to fall. Around Easter, there was only Chinese and Argentinian garlic available at prices of up to 4 Euro per kilo.

The high temperatures recorded in the winter months could have some impact on the harvest. What the market conditions will be for the domestic production is still difficult to predict. The harvest lasts from 1 to 20 June and is followed by another 20 days of drying. Last year, 30% to 40% of the crops were destroyed by floods, but this year the damage is not expected to exceed 15%.

Israeli exports remain small

Israeli garlic growers mainly aim to meet the domestic demand. Although consumption figures are low, prices can fluctuate sharply. The most relevant factors in this sense are the weather during the growing season and the situation of other product groups. At present, the price per kilo stands at 4.20 Euro, which is an average price. Depending on local supply, the market has, however, seen prices increase to levels 50% above or below the average recorded in recent years. In 2012, supermarkets started importing Chinese garlic because of a shortage of domestic garlic. Since that year, supermarkets have continued to import small volumes. Furthermore, there have been some attempts to export. The Canary Islands are the latest example, but exports have only limited success and the volumes are small.

Belgian traders not happy with European licenses

Between April and June, no new containers have been imported from China. At this time, the bulbs are too likely to sprout; therefore, imports from China during this period tend to come to a standstill. Belgian importers who want to import from China run into bureaucratic obstacles. Europe protects the crops grown in EU countries by issuing licenses for the import from other countries. Due to the limited number of licenses, importers must do their best to get an exemption and this brings them additional costs.

Garlic market in Sweden piggybacks on growing food segment

The rapid growth of the food sector is resulting in a rising demand for all products, and garlic is no exception. A catering supplier says that demand has increased dramatically in recent years, allowing them to expand the range. Garlic is also showing an upward trend. The product is available all year round and the market is also stable all year round; however, the fresh garlic market has also recorded a peak in recent weeks, as new produce has become available. Besides domestic garlic, the Swedish market also has imports from China and France. In the organic segment, imports are made from China and Spain.

Argentina planting despite rainfall

Argentinian growers have started planting for the next harvest. Despite the rain, it is going well. Because of the economic and political situation in Brazil, the largest market for Argentinian garlic, it is difficult to predict how the campaign will develop; however, traders see an increasing demand from the EU. For Argentina, the Chinese are the biggest competitors, mostly because of their prices. Around October, the country will start a new export season.

Every week, FreshPlaza and AGF.nl publish an overview of the market situation of a product in a global context. With these articles we aim to provide a view of a global market shrinking due to globalisation. Next week, papayas will be in the spotlight.

 

 

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