China’s Looming Inflation Problem [WealthWire]
August 30, 2012 Leave a comment
The economic climate in China is unsteady. Inflation, high last year, has settled, but another rise could spell trouble for the national economy.
And an unlikely market could be an indicator for a looming rise in inflation: hog sales.
Pork is the nation’s staple meat. It’s a huge part of the food market, and pork prices can have a large impact on food prices in general.
And right now, pork prices are set to jump.
A large amount of Chinese corn and soybean come from imports, and the U.S. produces a fair amount of these products. But this summer, a drought which has covered more than half of the United States has pushed up the price of these crops. Benchmark Chicago futures for corn and soybeans are at all-time highs.
And corn and soybeans are key ingredients in hog feed – putting pressure on hog farmers.
So some of these farmers are cutting down on their herd sizes, selling off their hogs in a move that will likely lead to a reduction in supplies and a jump in prices.