Hey Everyone,
I wish I had better news, but I don't. It seems that China and Hong Kong have still not come into the market this year. This causes everything to slow to a grinding halt.
As dealers at the export level start amassing inventory, their cash starts to tighten up. In turn, this starts flowing down the channels to your local dealers. For example, a local dealer might have 10k with which to buy ginseng this year. At an average price of $400/lb, that dealer can only buy 25 lbs of ginseng until he is out of money and needs to sell it to regain his liquidity and be able to keep buying. Hopefully, he will make some money and be able to pay more if the market price advances slightly.
In a normal year, that dealer would call his upstream dealer and the upstream would buy the ginseng held by the local dealer providing him with liquidity to keep buying. But, this year, the buyers at the top are starting to tighten up because they have been so far unable to export their inventory in amounts that will keep them liquid. When this happens, naturally, they are less likely to buy the ginseng from the local dealer.
Unfortunately, the end result is lower prices to the diggers too. If I am buying something at $450/lb and can't sell it at all, why would I keep paying $450/lb for that thing?
There is some movement in smaller lots in the country. But, typically these are for premium root and are not even close to enough volume to hold up the market.
For now, I am continuing to pay $450/lb hoping that something breaks loose. But, like all the buyers on every level, if it doesn't break loose, I'll eventually be forced to either pay much less or stop buying this year until I can regain liquidity.
