Every year live hog prices fluctuate up and down like a yo-yo due to the inconsistent flow of market hogs going to slaughter. Despite efforts to balance this out, production seasonality still complicates the slaughter capacity issue.
Over the last five years, nearly 27 percent of U.S. market hogs are slaughtered in the fourth quarter, while less than 24 percent go to market during the second. That may not sound like a huge discrepancy, but when hog supplies run near slaughter capacity, it can cause problems.
Not surprisingly, live hog prices shift inversely with production swings. "The price high for the year now comes in the second quarter, usually in June," says Glenn Grimes, University of Missouri agricultural economist. "The yearly low is usually in November, and the spring low is basically eliminated." Why is it so hard to smooth out market hog flow? It's because Mother Nature still rules. Seasonal slaughter runs are primarily caused by seasonal (summer) breeding problems, which is a combination of hot weather and physiological problems.
"It's mostly a production function, though there may be some function of demand involved," says Grimes.
A few management options can keep production swings manageable, though nothing completely eliminates seasonal infertility.
Adequate lighting, ventilation, and cooling in sow buildings is important, as is nutrition. "During hot weather, sows and gilts need a more nutrient-dense diet, because they eat less, but still need a certain amount ofinerals, amino acids and other nutrients," Ken Stalder, University of Tennessee swine specialist.
Simply breeding more sows during the summer is a common practice, but it has yet to be completely successful, says Grimes.
The end of seasonal production – industry experts have been predicting this for 30 years. Confinement housing was sure to hold the key. But no advance since that time has been able to overcome summer's biological challenges.
"As you look at the last 20 years, the fourth quarter numbers haven't decreased much," says Grimes.
That's not to say there have been no changes.
"Third quarter used to be the smallest quarter for slaughter, but the second quarter has slipped into that spot," says Grimes. "That's due mostly to weather, and the fact that the sow herd has moved further South. Also, sows may be more fragile today, and they are pushed harder." Producers and researchers continue to work on the problem of seasonal production swings. "As we learn more about interactions between genetics, environment and management, I like to think the industry could solve this problem," says Stalder.
If seasonal production swings could be eliminated, Grimes says the United States could slaughter 106 million to 107 million hogs annually with the current slaughter capacity, and at a price that producers could live with. "But," he adds, " we do not currently have the demand for that much pork.
"I don't know how greatly that amount of annual production would affect hog price levels. We certainly would find out what seasonality of demand amounts to, but live hog prices would be more stable." Stalder agrees that hog prices would be more consistent, but not necessarily more profitable.
Until researchers come up with a way to control seasonal infertility – and as a result level out hog numbers – you can expect slaughter and price trends to swing up and down as in the past. The lows will continue to occur in the fourth quarter, when slaughter capacity is most pressed and pork supplies are largest.