The price of carrots in Shandong showed a rapid decline last week. The lowest price already dropped to around 0.50 yuan [0.07 USD] per 0.5 kg, while the highest price fell from 1.2 yuan [0.18 USD] to 0.80 yuan [0.12 USD]. There are two main reasons for this recent development:
First, there is still sufficient supply of carrots in storage in Shandong. The carrot production volume in Inner Mongolia declined last year in autumn. Several traders with storage space then thought the supply of carrots in winter and spring would be limited, so they purchased large volumes of carrots in autumn and entered them in storage. The reduced production volume caused a price increase, and the large-scale purchases further pushed the price up.
Since the purchase price of carrots in storage was relatively high, the retail price of carrots also maintained a high position. This in turn affected the retail volume. As traders entered more carrots in storage and the price went up, the trade volume went down, and there is therefore still a large volume of carrots in storage. This will put great pressure on the price of carrots later in the season.
Second, the surface area devoted to carrot plantation in Qingdao and Weifang greatly expanded this spring because the price of carrots was relatively high last winter. The carrots from Shandong will enter the market in late March and early April. As soon as this harvest enters the market, the carrots in storage become worthless. This is the reason why the carrot traders in Shandong have rapidly lowered their prices in the last two weeks.
