Chinese herbal medicine price index is expected to call back 15% to 25%

Business News Agency reported on July 15th that the comprehensive 200 index closed at 2885.20 points in June, a decrease of 1.12% compared with May 2011, which was the first time in five months that the monthly chain fell.

Regarding the future trend of prices of Chinese herbal medicines, Jiang Erguo, deputy director of the Chinese Medicinal Materials Information Center of the Chinese Medicine Association, said in a telephone interview with the author a few days ago that the wave of price increase of traditional Chinese medicines that began in the first half of 2009 has seen a trend of declining. The callback has been unavoidable. The turning point will appear two months later. It is expected that the comprehensive 200 index will be adjusted back to around 2500 points, and the bottom limit position is near 2200 points. There is still a 15% to 25% callback space from the current point.

Unlike the pullback of most agricultural products after a short-term surge, this round of Chinese herbal medicines has gone up for more than two years. There have been four rounds of soaring prices. In 2010 alone, of the 537 medicinal herbs in China, more than 80% of medicinal herbs rose in price, with an average increase of 109%. Individual herbs increased by as much as 400%.

However, according to Jiang Erguo, the continued high price operation has hurt the market demand for Chinese herbal medicines. Since the beginning of this year, the trading volume of Chinese herbal medicines has continued to decline. Due to the traditional off-season demand for Chinese herbal medicines at the same time, the overall trading volume in the Chinese herbal medicine market fell by nearly 30% in June. At the same time, high prices also stimulated the expansion of the planting area. With the arrival of Chinese herbal medicine harvest season in October, the prices of Chinese herbal medicines such as Chinese angelica, astragalus, and Banlangen will be significantly reduced, which in turn will drive down the overall price of Chinese herbal medicines.

Jiang Erguo also said that although the overall correction is inevitable, it will not collapse, and the comprehensive 200 index has strong support near 2,500 points. The callback can squeeze out some of the bubble brought by hot money speculation and promote the healthy development of the industry.