The Big Hog Cycle- What goes down, must go up? John Bancroft, OMAF Swine Grower-Finisher Specialist

What is the hog cycle? In theory, the hog cycle is four years in length. It is the interaction of the pig inventory, hog slaughter, and hog price. As the pig inventory grows, the number of hogs slaughtered increases and the price decreases. As the profitability decreases, marketing more sows and not keeping as many replacement gilts reduces the breeding herd. This creates a further increase in slaughter numbers. The graph below provides an example using United States (U.S.) data from January 1998 to December 2001 on a quarterly basis. With the profitability in the industry in 1996 and 1997, the inventory of pigs started to increase and it peaked in the third quarter of 1998. The number of pigs slaughtered increased during 1998, peaking in the fourth quarter, resulting in the low price for the cycle. The U.S. breeding herd continued to decrease for eight quarters. Slaughter decreased on a year over year basis. Because of the decreasing slaughter and inventory, prices returned to profitable levels in 2000 and 2001. Again, slaughter and inventory numbers began to creep up in 2001. This led to another price cycle low in the fall of 2002. The various components that influence the hog market cycles are constantly changing and interacting. What about the interaction of price, inventory numbers and slaughter volume for both the United States and Canada? The graph below provides a picture of the relative percentage changes from one year to the next of these three items using the combined inventory numbers and slaughter volumes for United State