Economists are scratching their heads to explain the pork price jump. Some blame it on blue-ear, a contagious disease which may have killed 18,000 or 20m pigs, depending on whom you believe. Others say the main cause is the surge in global grain prices, which have increased the cost of feed for pigs. It is not only theChinese who are paying more for their pork.CapitalEconomics, a London-based economics firm, points out thatAmerican pork prices have also lumped by more than 50% over the past year.
Economists, however, may recall the old "hog cycle" that they learnt about in their first year of economics. This explains why prices in certain markets are subject to periodic booms and busts, because of a lag between the response in production to a change of price.Chinese pork prices today are not much higher than at their peak in 2004. High prices then prompted farmers to produce more, and prices fell sharply for two years. That in turn discouraged farmers from raising pigs. The inevitable result was today’s higher prices, which will probably lead to glut and falling Prices tomorrow. Pigs may fly.But not forever.
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