Buyers of garlic are painfully aware that it has been a very challenging time with not only skyrocketing prices; but also, increasingly tight supplies.
With the US harvest essentially completed by the end of October 2016, domestic US garlic supply has been a concern for several months. Recently this shortage has become more severe than previously expected. Due to drought conditions, high heat, and excessive soil salinity; the US harvest of garlic is less than 50% of normal yields. As a result, domestic garlic is now being allocated at 50% or less of normal volumes.
Because of this allocation, Skidmore’s supply of US garlic is extremely limited. Although Chinese garlic is also tight, it’s not as constricted as domestic garlic. The Chinese tightness is associated with world supply deficits, which were impacted by the poor US crop, along with processing bottlenecks in China due to environmental regulations and rising capital requirements. There is also concern that speculators are holding back Chinese inventory to drive prices higher. Even with this overall tightness, Skidmore does have Chinese garlic available, although very large volumes would need to be confirmed.
Due to these world supply shortages, price increases have varied, but in general have increased 50% or more compared to previous year pricing.
Skidmore is keeping close tabs on the situation, but supply relief is not expected on US garlic at least until the next crop is harvested which is late Summer/Early Fall 2017. We recommend caution is exercised on domestic garlic until the planting and yield for this next crop is better understood. And, we anticipate that replenishment of supply will most likely keep pressure on both US and Chinese prices.
Due to a series of price increases, Non-Fat Dry Milk Powder (NFDM) has gained considerable interest as of late. Using a USDA published price index (featuring Low Heat NFDM Central/East averages), prices have risen from a recent low of $.7425/lb. at April 16, 2016 to the current price of $1.03/lb. Although this is a dramatic increase of 38.7% in less than a year, prices still remain on the low side. As shown in the graph below, NFDM prices over the past three years have declined considerably since its 2014 high of $2.11.