Chinese Dates: Output Unspecified, Supply Outstrips Demand Continues

Chinese dates belong to self-produced and self-consumed agricultural products. Due to their ease of storage in cold storage facilities, determining last year's total supply is crucial for analyzing the market balance. The demand for Chinese dates generally has a high correlation with festivals, seasons, and other factors, leading to short-term contradictions. Currently, the main issues on the market are focused on three aspects: new season production, existing inventory, and downstream demand. In my opinion, the Chinese date futures contract is mainly speculative, focusing on making profits through price fluctuations.

One, uncertainty about the yield of the new season

The overall ability of date palm trees to resist weather interference is strong. However, due to differences in soil fertility and management intensity, there may be variations in production yields, leading to "good" or "bad" years. Since 2019, the yield has been reduced by about 20% every other year, with a large difference in the magnitude of reduction.

From the relationship between Chinese date prices and last year's production, it can be seen that the price fluctuation was relatively small in 2019, mainly oscillating. In 2021, high temperatures during the fruiting period and low temperatures during the germination period led to a reduction of about 60% in yields, causing the price trend to shift upward. The price rise started from July of that year. In 2023, the price began rising from April.

This year's germination and flowering weather has been normal, but since mid-June, a local high-temperature event in Xinjiang has affected the first batch of fruiting dates. However, many research institutions have reported that the second batch will be better than expected, leaving room for speculation about the yield reduction. Some pessimistic analysts believe it may reach 40%, while others are optimistic and think it will only be around 10%. According to data from research reports (reduction of 20%~25%) and weather data, I tend to think that this year is a small-scale reduction year, with a yield reduction of about 20%, which will not have enough upward driving force for prices, and there may still be market fluctuations before the production season ends in October.

Two, existing inventory is relatively ample

Generally, new-season Chinese dates go through the peak seasons of autumn, winter, and the Spring Festival, and then enter cold storage facilities. The inventory data for Xinjiang, Hebei, Henan, and other regions has become an important indicator for supply-side attention. As of August 1st, the cumulative inventory of 36 sample enterprises was 10,039 tons, which is significantly higher than last year's same period (5,383 tons) but slightly lower than the previous year's same period (10,681 tons). The sample data shows that the inventory is relatively ample. As of August 6th, the number of warehouse receipts for red dates futures contracts was 9,226 tons, which is lower than in previous years.

Three, downstream market demand is weak

The current domestic consumption of Chinese dates is around 50,000~55,000 tons per year. The space for increasing demand is limited. According to institutional data, as of August 5th, the cumulative volume of red date sales at the Liuyi Fang market in Guangdong Province was 681 vehicles, which is slightly higher than last year's same period (639 vehicles) but significantly lower than the previous year's same period (749 vehicles). The main factors contributing to this include increased e-commerce channel sales and a decline in overall consumption.

Institutional tracking of Hebei gray date sales revenue shows that in years when production is expected to be reduced, such as 2021 and 2023, the revenue has risen in August-October. The current revenue is RMB 2.22 per kilogram, which has increased significantly from June (RMB 1.36 per kilogram). Revenue can also serve as a indicator for observing whether downstream sales are smooth, and it is expected that the upward space will be limited due to inventory being relatively ample and consumption being weak during peak seasons.