In the first and middle of March, the new star anise market saw a significant rebound from the continuous decline of the past two to three years, with prices of different specifications increasing by more than 10%. Among them, the dry branch had the highest increase, rising from 17-18 yuan to 22-23 yuan, exceeding 30%. The market for bulk products was booming, making it one of the most popular varieties in the seasoning market recently. So, it is said that the production capacity of star anise has been restored in recent years, why has its price risen sharply at the critical moment when new goods are impacting the market? Is there still room for further increase in the later stage?

1、 The market trend has been declining year by year after the high price

In the previous years of low production and declining inventory of star anise from 2019 to 2021, the popularity of star anise continued to rise, with a price increase of over 50% in 2019. In 2020, the market continued to double, and in the first half of 2021, it reached a historical peak of 100 yuan, achieving a glorious period for star anise. The high price brought about the subsequent recovery of production capacity. In recent years, with the increase of listed goods, the market for star anise has been declining year by year. In 2023, it dropped from around 60 yuan (big red) to below 50 yuan, and in 2024, it continued to fall below 30 yuan.

After the Spring Festival, it is generally the off-season for the demand for catering seasonings. Before March this year, the market trading of star anise was still relatively light, and merchants were mostly adopting a wait-and-see attitude towards the market. Due to sufficient inventory, the market continued to hover at a low level.

2、 Various factors combined to create a new upward trend in this year's market

In February, the spring fruit of star anise in Guangxi production area has gradually started to produce new products. In the early stage of new production, there was still no obvious attention paid to the production area and market. However, with the promotion of new production, the production capacity situation of this year has gradually become clear since March. Combined with various other factors, the popularity of star anise has begun to rise. With the increase of supply and transaction volume, the market has ushered in the best upward trend in nearly two or three years.

Overall, the reasons for the recent rebound in star anise prices are as follows:

One reason is the decrease in spring fruit production this year. **From the second half of last year to around the Spring Festival this year, most of the production areas in Guangxi were dry, and some areas had no effective rainfall for several months. Due to insufficient nutrients, the star anise, which was in its fruiting period, had a low fruiting rate, small size, and decreased yield per unit area, resulting in lower overall yield than in previous years.

The second is the increase in labor costs for picking. **Due to the low fruit hanging rate of star anise this year, the picking efficiency of farmers has decreased, and the quantity picked in a day is much less than normal. However, the daily wage is relatively fixed, so the labor cost of picking is relatively high, leading to an increase in fruit prices.

Thirdly, the enthusiasm for harvesting fruits in areas with low fruit prices in the early stage is low. **In the early stages of this year's new crop production, the price of fruits in some areas of the production area was only a little over 2 yuan (market weight). Excluding labor, the profit margin of growers was very narrow, resulting in low harvesting enthusiasm. In the early stage, the quantity of fruits on the market was not large, and it was not until later when it rose to more than 3 yuan that the output improved.

Fourthly, rainfall affects harvesting and processing. **From early February to mid March, Guangxi and Yunnan production areas experienced prolonged rainfall, with precipitation levels exceeding the average of previous years by more than 50%. This seriously affected the harvesting, processing, and drying of star anise. In some areas of Guangxi production areas, the vacancy rate of drying plants reached over 70%, resulting in production delays and a sharp decline in the market volume of dry goods compared to the same period in previous years.

The fifth is the active replenishment of market merchants. **Affected by the decline in spring fruit production and the fact that the current price of star anise is the lowest in nearly six years, secondary and tertiary market merchants in various regions have begun to actively replenish their stocks. The acceleration of supply flow, the continuous increase in trading volume, and the sustained rise in popularity have driven the continuous rise of market prices.

The sixth is the surge in export demand. **According to relevant statistics, Vietnam's imports of star anise from China in March surged by 45% year-on-year, mainly in the form of dry branches. Vietnam is also a major production area for star anise, but due to the high domestic and export demand this year, the domestic production cannot meet the demand. As a result, buyers have purchased a large amount from China, causing a rapid rise in the market.

3. Recently, the market has started to trend sideways

There are many factors that have caused a significant increase in the price of star anise in the early stage, some of which are variable. Since April, with changes in the following aspects, its price has shifted from rising to stable, and the market has begun to trend sideways.

One is the increase in the purchase price of fruits. **In the early stage, the price of fruits was too high and the enthusiasm for picking in low yield areas was low. It was necessary to adjust the market situation to stimulate production. With the rise of the dry goods market, the purchase price of the production area increased synchronously, which stimulated the picking volume and gradually supplemented the new goods on the market. The second is the improvement of weather in the production area. **Since late March, the weather in most production areas has remained clear, and the picking efficiency of star anise has significantly improved. At the same time, processing and drying work has also been carried out smoothly, which has eased the tight supply of goods. The third is the slowdown of market supply movement. **Due to the significant increase in prices, the purchasing power of merchants at all levels of the market has begun to weaken recently, resulting in a decrease in trading volume and a slowdown in the flow of goods. Some short-term turnover merchants are actively selling to realize their profits, but large investors who are optimistic about the future still have weak selling intentions and continue to hold positions. The fourth is the pressure of inventory. **The high prices from 2019 to 2021 have increased the enthusiasm of growers in the production area for production management, as well as improvements in grafting and dwarfing techniques. Coupled with normal weather conditions, the production of star anise has been relatively stable in recent years, and inventory has been effectively accumulated. Currently, the reduction in spring fruit production can only affect the psychology of merchants in the short term and has not fundamentally changed the current pattern of oversupply of star anise. Therefore, the recent price increase will increase the probability of inventory returning to the market, thereby suppressing the continued rise of the market. Merchants have to be cautious.

4. Future Market Analysis

At present, the market for star anise is still at a low level. In the long run, due to the prosperous production period of star anise trees lasting for decades, the high price period around 2020 will stimulate an increase in planting volume, providing a stable foundation for future production capacity. In addition, inventory has gradually accumulated in recent years. If production continues to be normal in the future, inventory may continue to increase. Therefore, from the perspective of production volume, there will still be a long period of low price period for star anise in the future. From a recent perspective, the production of spring fruits will continue for a period of time, and weather changes in the production area will continue to affect subsequent output. The reduction in spring fruit production this year has become a certainty, but compared to Dahong, the yield of spring fruits is very low, making it difficult to cause significant and continuous market fluctuations. Therefore, it is only suitable for short-term profit from market fluctuations. In addition, it has been observed that last year's drought has also had a certain impact on the flowering of Dahong this year. The production area has reported that the yield of Dahong in autumn is expected to decrease compared to normal years, so the climate and plant growth in the production area need to be closely monitored in the coming months. It is expected that there will continue to be slight fluctuations in the market for star anise before the end of spring fruit production this year. The overall fundamentals are positive, and the next significant change is expected to occur during the period of big red fruit production, which is worth paying attention to.