This chart showing cyclical movements in hog prices over the past decade was posted on the boyar.cn site to place the current rise in prices in historical context. The Chinese hog price has tended to rise and fall in 3-year cycles.
Since July 2010, the hog price has been on the upswing for 12 months, reaching near 15 yuan at the chart's end in May 2011. The article describes the current cycle as having its own unique character of "inflation combustion" and insufficient supply driving prices upward.
The 2004-06 cycle was also driven by inflationary pressures in its early stages, says the article, while that cycle's downturn was due to disease outbreaks--similar to 2010. The sharp rise in prices during 2006-08 was due to insufficient supply. The article suggests that the current upswing in price is similar and will take 2 years to play out. The article suggests that hog prices will continue rising until April or May of 2012 before beginning to fall.
The article attributes the current rise in price to low hog inventories resulting from low prices in spring and summer of 2010. Many farmers and companies "learned a lesson," discouraged by disease risk and low prices. A year later, there are fewer finishing hogs available. Furthermore, feed, labor, and vaccine costs are up, and interregional shipments of pigs are down due to rectifications following the clenbuterol incident in March.
The article says that future supply will be "fine tuned" by sales of reserves and imports (smuggling). Yes, it said "smuggling" in parentheses; the same language appeared in at least one other article this week.
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