Ginger prices are likely to rally further from their current levels because of good demand from West Asia and low supply from China.
Traders said currently, India is the only supplier of good quality ginger in the global markets as Chinese production is low because of erratic weather in its producing regions.
Nigeria and Ethiopia, the other two major ginger suppliers in the global markets, have quality problems and have been regularly defaulting on contracts, making perspective buyers jittery. Domestic ginger prices are already ruling high, with dry ginger quoting at a high of even Rs 230 per kg in the terminal market of Kochi.
According to Spices Board data, ginger (best variety) was quoted Rs 200.42 per kg during the week ending June 12 while the relative price for the same period in 2009 was estimated at Rs 125.42. In the week ending June 5 2010, ginger was quoted at around Rs 195 per kg. ?Ginger price in the local markets would have dropped, but could not because of low imports in 2009-10,? said Ramalingam Vishwanath of GRK Traders said.
The Spices Board data showed that import of both fresh and dry ginger has been lower in 2009-10.
India imports fresh ginger mainly from Nepal through the land route while dry ginger is exported by processors for conversion and grinding.
Trade sources said demand for fresh ginger has increased in the domestic market substantially in the recent past.
?Quality of Nigerian and Ethiopian ginger is pathetic. The oleoresin industry which imports substantial quantity of their requirement is finding availability of quality ginger a big problem,? Nandakumar P, a trade consultant told FE.
The major factor has been dip in availability of ginger from China, he said. Farmers in China, who produce a third of the world?s supply, are planting less ginger after years of low prices.
Supplies are also being hit by growers trying to cash in on the high prices for ginger seed, reducing the amount planted, and China?s strict export laws after a pesticide scare.
Indian prices and Chinese prices were at a parity in the international markets during the week ending on June 18 at $4.96 per kg.
During the same week last year, Indian prices for a kilogram of dry ginger was quoted at $3.09 at New York market as against $ 1.81 of China.
India produces 2.75 lakh tonne of ginger per annum, almost a third of the world?s production of 8.35 lakh tonne. The major consuming nations are US, UK, Japan and Saudi Arabia.