The Pork Industry at a Glance - National Pork Board

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What determines the price of hogs?
Market hog prices in the U.S. are determined by the basic economic forces of supply and
demand. The supply of hogs is determined by the price of production inputs and production
technology while demand for market hogs is derived from the demand for pork and
other products made from the pig.
The interaction of supply and demand results in prices that vary over time. This graph
demonstrates all of the forms of price variation – trend, cycle and seasonal. Trends can be
seen in the growth of hog prices during the 1970s (largely attributable to increasing meat
demand and inflation) and the decline of hog prices during the 1990s, as new technologies
and lower grain prices reduced the average cost required to produce pigs. The uptrend of
prices from 1998 to present is due to stronger export demand and higher costs, primarily
due to higher feed prices driven by ethanol.
Cyclical variation can be seen in the 3-4 year period between price peaks and lows. The
"hog cycle" is caused by the biological lags inherent in pig production, producers’ need for
sufficient resources in order to expand and producers’ natural tendency to try to endure
hard times before reducing production.
Iowa - Minnesota Market Hog Prices
Weekly January 1973 thru September 2009
100.00
90.00
80.00
$/cwt. Carcass
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
’73 ’75 ’77 ’79 ’81 ’83 ’85 ’87 ’89 ’91 ’93 ’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09
Source: USDA Agricultural Marketing Service
96 Stats