The price of garlic goes up and down in the past ten years.

"this year's surge makes me feel very uneasy, as if I saw the shadow of many years ago." Lao Chen, a garlic businessman in Jinxiang, Shandong Province, suffered a slap in the face as soon as he entered the fried garlic market in 2008, and that failure still scares him.

In this year's surge, Lao Chen finally made up for the deficit of previous years, and he set his sights on small varieties such as ginger, which do not have a futures plate. "subtle changes in the relationship between supply and demand of agricultural products provide an opportunity for hype." Lao Chen said.

"garlic is ruthless" has its ups and downs.

"in fact, everyone is gambling." This is the most frequently said sentence by Lao Chen, but the huge blindness and the inherent greed of businessmen make many garlic merchants gamble wrong.

After the "golden age" of garlic prices in 2006, garlic prices fell back rapidly in 2007, and by the middle of June of that year, the price of new garlic fell to a low of 0.75 yuan / jin. This let Lao Chen and his partners see the hope of getting rich, so they pooled more than 1 million yuan through various channels and resolutely "killed" the bottom of the garlic market.

"unexpectedly, the price of garlic completely collapsed in 2008, once hitting an all-time low of 0.05 yuan / jin." Talking about that terrible experience, Lao Chen still remembers it vividly. "although it went up a little later, soon we couldn't even cover the cost of cold storage, and in the end we really lost all our money."

In Lao Chen's impression, the price of garlic bottomed out in 2009 and rebounded in 2010. In 2011, "garlic is ruthless" disappeared, and "garlic you are cheap" arrived as promised. After peaking in 2012, garlic prices bottomed out again in 2013 and 2014, and did not improve until 2015.

In the futures market, soybean, wheat, corn, sugar and other highly market-oriented agricultural products are too large to be hyped by a small number of speculators. However, garlic has a concentrated origin and is easy to be stored in cold storage, making it one of the most suitable agricultural products for "hype".

The layout of Lao Chen to "make up the deficit"

At 4: 00 a.m. on the 6th, the Xinfadi market in Beijing was busy. When a reporter from the China Securities News visited garlic distributors and found that the wholesale price of dried garlic in bags was as high as 480 yuan per bag that day, each bag was only 58.5 jin. "in the past, the price of garlic in bags was 60 jin per pack, but recently the price of garlic has gone up. Not only have we raised the price, but the weight of each bag of garlic has also shrunk. We can only increase the selling price, but we still can't make any money." A merchant pointed to the cold storage not far away and said, "they have earned all the money."

Daily market prices in Xinfa show that the average wholesale price of garlic rose to 7.3 yuan per catty from 4.95 yuan at the beginning of the year, an increase of 47.47 percent. The retail price of high-quality garlic exceeded 8.5 yuan, much like that of 2006.

For the current round of garlic prices "skyrocketing", Lao Chen believes that the main reason is the reduction of planting area and the reduction of production caused by natural weather. Lao Chen is more cautious about the trend of garlic prices in the future. Garlic prices may not fall before the Spring Festival. Wait until March or April next year, Yunnan side of the new garlic on the market, will have some impact on prices. "

"garlic prices have risen sharply this year, and garlic farmers will increase their planting area accordingly. If there is no extreme weather next year, the output of garlic will be greatly increased, and the price of garlic will probably be on a roller coaster again. After consultation with the partners, Lao Chen chose to finish the stock of garlic this season at the price of 7.5 yuan / jin, which can fill the deficit of previous years.

Similar to Lao Chen's idea of making up the deficit this year, when a reporter was conducting a survey on the Xinfadi Agricultural products Wholesale Market in Beijing, some merchants said, "there are many well-funded distributors." put the garlic purchased in the summer in the cold storage waiting for the imbalance between supply and demand in the market to sell, in order to make high profits. There are even individual bosses who have made a profit of more than 12 million this year. "

In Lao Chen's view, the rapid rise in garlic prices is essentially no different from the rise eight years ago, all caused by the imbalance between supply and demand.

"garlic prices are rising too fast, on the one hand, supply is tight, on the other hand, it is hype." Zhao Qingming, chief economist of the China Financial Futures Exchange Research Institute, believes that in terms of economic benefits, farmers are more willing to go out to work, resulting in a substantial reduction in the cultivated area of agricultural products, especially cash crops such as onions, ginger and garlic. At the same time, the demand for these products is relatively stable, so there are some people hoarding in circulation and taking advantage of speculation.

"Don't be too expensive" the capital is restless

With the rise in the price of garlic, ginger also shows a homeopathic upward trend. According to the merchants of the Xinfadi Agricultural products Wholesale Market, the retail price has exceeded 4 yuan per jin. He even said to the reporter, "Don't be too expensive. You can't buy it at this price in a few days."

Throughout the hype of agricultural products in previous years, they all have a common characteristic, that is, they are easy to store. When garlic and ginger are continuously hyped, it is also easy to have an exemplary effect and push up the prices of other agricultural products. Lao Chen's partners are planning to add in all this year's earnings and make more money.

It is worth noting that garlic, ginger and other agricultural products are not traded in the futures market, and the degree of marketization is not high. This is mainly because although they are daily needs, the demand is small compared with the varieties in the futures market, the output is not large, and they do not have the significance of strategic storage, so they are easily manipulated by speculators.

"but speculation in agricultural products cannot be regarded as an investment, it can only be a variety of short-term capital speculation. The stories of garlic hype are all short-term phenomena. " Xia Natural, a macro analyst at Monita, said that after all, it is in a state of 'asset shortage'. After real estate is tightened, the money will flow to other places. Products with concentrated origin and limited output are more likely to be manipulated.

Xia natural said that it is very difficult to completely avoid the hype of agricultural products, unless the government intervenes in prices, which is the easiest way, of course, it can also limit hoarding or government reserves.

The hype of garlic and other agricultural products will appear every few years. Is it a new battlefield for investment funds under the "asset shortage"? Zhao Qingming said: "the market for agricultural products is very small and the absorption of funds is relatively limited. At present, economic growth is falling, inflation is falling, and corporate profit margins are falling. Under such circumstances, financial products with high returns and low risks must be reduced, so we should let the market balance itself and should not exaggerate the so-called 'asset shortage'. "

The market is irrational. In the sharp rise and fall of garlic prices, the losses of some garlic farmers are as high as thousands of yuan per mu. At the same time, the instability of expectations also makes some agricultural products more likely to be hyped, and prices fluctuate too much. Lao Chen said frankly, "it is best to ensure the stability of garlic production from the source and guide garlic farmers to make reasonable arrangements for production and sowing plans." In this regard, industry insiders said that the "insurance + futures" model is conducive to the protection of farmers' planting interests.

Qu Dongyu, vice minister of agriculture, said a few days ago that China's agricultural risks are increasing, and there is an urgent need to further improve and improve the market risk management mechanism. First, it is necessary to enrich market risk management tools and strengthen knowledge popularization. While doing a good job of agricultural production and ensuring food security, we should take the initiative to make use of modern management tools such as price insurance and agricultural product futures; second, we should steadily expand the pilot scope of "insurance + futures"; third, we should vigorously explore the model of "fixed production by sales + price insurance".