UNlT.DJ S'ATS Wsi i -'R OF AGRICULTURE
Bur-,",.L of A'ricultural Economics
S. i :-'ton
HS-2 ,- December 1936
S THE HOG SITUATION
U.S. DEPOSI1, r Su..ry
The seasonal low point in hog -?rices was reached in late October this
ye-,r, with prices remaining fairly steady in Io'.e.-b. r and a rather sharp ad-
vance occurring in early December. T: : averse -rice for hogs purchased by
packers and shippers at Chic,-_. in Nove-nber was $9.48 per 100 pounds, 7 cents
lower than in October but 17 cents hii.--r than in il-". ,er a year earlier.
Sloui.hter supplies were large in November. 7.-e total number of '-..
slaughtered under F-ederkl inspection amounted to 4,292,000 head, a 23 percent
increase over the October slaughter and a 77 percent increase over slau1.t-er
in November a year earlier. The comparative strength shown by hog prices in
the face of relatively large su-plies was due in '.rt to increases in consumer
demand for meats, r il in :"rt to an active demand by packers for storage
Hog prices during most of the remainder of the 1936-37 marketing year
(through September 1937) are expected to average higher than in corresponding
periods in 1935-36. The price movement from now until about the end of March
is expected to be generally upward. A further advance in hog prices is
anticipated for the coming summer.
A larger than usual proportion of total slaughter for the current
marketing year will have occurred by the end of December. The number of
hogs slawiano-ered in the calendar year 1937 probably will be smaller than
in 1936 even thL.-Lj.l the total for the 19,_'-37 marketing year may be larger
than that of a year earlier. The low hog-corn price ratio prcvailir.g in the
fall months probably has resulted in a rather sharp curtailment in breeding
operations for the 1937 spring pig crop, and this curtailment together vrith
the reduced 1936 fall pig crop is expected to result in comparatively small
-;a-lies of butcher hogs for at least another year. If corn crop prospects
are more nearly normal next year, the hog-corn price ratio is expected to
advance rather sharply by the time breci Jing for the fall pig crop is begun.
Under these circumstances an expansion may be expected in "- production by
next fall. This e:. ar. ion will not be reflected in slaiL.`-.ter supplies, icw-
ever, before the spring of 1938.
Review of Recent Developnents
3?._'_;'_Tl3 On January 1, 1933, the number of '.-Js on farns
was at the highest level in 10 years. Slaughter numbers in 1933
were large and the condition of demand was such that prices of
butcher hours fluctuated between $3.00 and $4.00 per 1-.0 pounds.
In 1934, numbers were reduced sharply because of the severe dr(u .-.t.
and the operations of the Federal corn-hog adjustment prc.-_ .... As
a result of r_ ,:-tly reduced :1 ;.t.ter supplies and ir.proved de-.-::.
conditions, -.V prices rose sharply in 1923. The corn crop in 127.
was cf fair size, and corn prices declined. Thus, the h.-:-corn price
ratio bec:a..e distinctly favorable for breeding, and there were .=rp
increases in the piE crops of the fall of l'. and sprir.: of 19Jg.
..e expansion in 1- .- production was checked, however, b" the fci
short- caused by the 19.: drought.
The decline in hog prices which ':,_-. in late A.;, ust of this year con-
tinued until late October when the seasonal low point was rec.-.ed. Prices re-
covered slightly in early November and re:..ained fairly st-',dy thr -<'.-ut the
nonth at a level very little lower than the average for Ocbc,:'r.
T..... ..irket receipts of ..- 3 in November were much lar,- r than those
of a year earlier, prices veorn ed so,.ierht li *. r, reflect: to a ":. ex-
tent the increase in consumer --..r.- i .- -:-.-.er and t:.: 1-"-:. ed dem:.and for
hog Troctts. Aln active storage demand also was instrumental in : '
si-i crt to 1hc -rices. F.'..:r zi ..: of ir :. .t-forced i j~dation were evident
in I.vc:T er, n~d at the close of the month and in early Dece:ber ...- -:':.es
turned, un rather sharply.
Good and choice heavy weight hogs (290-350 pounds) sold above medium
weights (200-220 pounds) of the same grades at Chicago in late November for
the first time since February 19J.5, reflecting the relative scarcity of the
heavier weights in the slaughter supplies. The price range on all butcher
hogs of good quality weighing over 200 pounds was very narrow. The spread
between the prices of packingi sows and butcher hogs also was narrow in
November. Extremely light weight hogs, however, still sold at a considerable
discount uin.-]c prices of medium and heavy wei hts.
Hog slaughter increased about seasonally from October to November.
Slaughter under Federal inspection of 4,292,000 head in November was 23 per-
cent larger than that of a month earlier and 77 percent larger than the
extremely small slaughter of November a year earlier. The rate of marketing
varied considerably by regions. An unusually large increase in the rate of
slaughter in westernn Corn Belt markets was apparently about offset by less
than seasonal increases in other areas.
Thou-h. the average weights of hogs marketed decreased rapidly from
August to November, the full utilization of grass crops made possible by
excellent fall weather conditions has aided in producing a fair finish on
hogs in spite of the relative scarcity of feed grains. Average hog weights,
which in September and October were lower than thoseof the sane months in
1934, were higher than in 1934 during the latter half of November.
Storage stocks of most pork items and of lard showed considerable
Increases during November. Total storage holdings of 456,000,000 pounds
of pork on December 1 were about normal for that date, and were much larger
than for December 1 a year earlier. Holdings of dry salt pork, however, de-
creased during the month, largely as a result of the comparatively small
-upply of heavy hogs. Storage holdings of lard totaled 107,000,000 pounds
on December 1, about 13 percent larger than such stocks on IT-enebr 1. This
was t'e first time since 1924 that lard holdings have increased in November.
Wholesale prices of fresh pork, after declining sharply in October,
advanced in early :ioveriber but declined .-oderi-tely in the latter part of
the month. The price on heavy cuts exhibited a comparative strength which
was consistent with the stren.-tL. in the price of heavy hogs. TWholesale prices
of cured por.: products were mostly steady during November, following a gradual
decline in October. The composite wholesale price of hogs at New York was
$20.04 in November compared with $20.90 in October and $23.71 in November
of last year. The price of lard turned upward considerably in November, and
reached new hichs for the year in the first days of December.
Total exports of pork in October amounted to 4,250,000 pounds, only 1
percent lar-er than in September in spite of the increase in domestic slaughter,
and 9 percent less than the quantity shipped in October 1935. Although ship-
ments of bacon held up fairly well, largely as a result of relatively high
foreign prices for this product, total exports of hbas and shoulders declined
to new low levels and were nearly 40 percent less than the extremely small
shipments in October, 1935.
Total lard exports in October, h]owev-r, showed a further increase.
Lard shipments totaled 10,500,000 pounds, 34 percent greater than those in
Septe.iber and 62 percent -.renter than the small shipments in October of
last year. Substantial increases were made in shipments to the United
Kingdora, Mexico and Germany, with Cuban takin-s remaining relatively lar-e.
The Outlook As.. It Now Ap-ears
With industrial activity and pay rolls showing further advances,
consumer income and demand for meat products is expected to continue the
improvement now under way.
It is anticipated that national income will show about a 10 percent
increase in 1937 over that of 1936, which will be a supporting factor in
maintaining ho[' prices. This situation, t cctl.erwith the probability that
hog slaughter supplies will be comparatively small next spring and summer,
have resulted in a current strong storage demand for hog products, which is
expected to be an important price supportinC factor for at least another
month. If corn crop prospects are approximately normal next spring, a com-
rJ-atively strong demand for breeding stock is expected to develop, which
by te ..i:- further to reduce the supply of hogs available for slaughter at
that time is also expected to be a price supporti.: factor.
Although exports of pork and lard increased moderately in October and
some further increase may be anticip-ted for the balance of the y'e:.r, foreign
demand for American hog products is at a comparatively low level, and is not
expected to improve sufficiently in 1937 to attract any C'reat volume of
American exports. 31Sipmer.ts of cured pork to Great Britain are run:-i:l-
currently below quota levels, and the reduction in British imports of lard
has been offset to a large extent by increased imports of .ve;etable and
marine oils. The recently announced food reserve prro,ra, in Great Prit'i:.,
however, -may result in increased l-i;.nents of lard to that country in the
near future. Latest census returns indicate that the recent increases in
..nu.mbers have become more general in Continental Europe. It is expected
that slaughter supplies of IL-,-s in Germany will show substantial increases
in the late winter and -prin.- months, and in Denmark supplies of hogs for
slauZhter in the winter season will be considerably larger than a year
The increase in hog numbers in Europe, together with the continuation
of exch---e difficulties and the relatively s., ll sl-.u,:.ter supplies and ].i,-h
prices of ."s anticipated in the United States, is expected to result in a
lower level of exports of r r': and lard in 1937 than in 193'.
Althou supplies of h.o s in the 19.7.-37 marketing year are e>?c-ted
to be l?,:-r than those of either of the two preceding r: .r!ting ,e-r,
slau-'.':r for 1937 will -rrbably be lower th-.n in 1936 nr.. may be nearly
as low as in 19'. The heavy winter run of '.r-s marketed, which be,-':. in
October, is expected to be over by mid-January earlier t'fan usual .:
will have accounted for a much 1 :r-r than usual -r--.)crtion -f the markett i..-
Slaughter supplies from January to March probably will be much smaller
than in the period from October to December, although slaughter in those two
periods ordinarily is about equal. Hog prices in the first quarter of 1937
are expected to continue the rise begun in early December.
The sharp rise in feed prices which occurred in.July and August re4
suited in a rather heavy liquidation of sows bred for late fall litters, and
a c-o:?piratively small fall pig crop. A larger than usual pri-r.portion of the
total fall pic crop (June 1 November 30) was farroved in the early summer
months, with the result that the peak of marketing of 1936 fall pigs may be
reached in April next year rather than in May or June. This may result in a
moderate recession of hog prices in late March or April. The relatively small
supplies of butcher hogs anticipated for slaughter in late summer 1937, and
the witol.'il.dir: of sows for breciiig if corn crop prospects are normal, are
expected to result in a fairly sharp price advance in that period. Hog prices
will probably reach the hi -1;,t point for the 1936-37 mar!'eti!-,- year in late
summer or early fall of 1937.
The advance in hog prices in the first week in December carried the
hog-corn price ratio to 9.3, based on Chicago prices, the highest weekly
average ratio since the week ended September 5.
Corn prices are not expected to show much change from present levels
until prospects for the 1937 corn crop become apparent. With hog prices
probably advancing from now until March, the hog-corn price ratio is expected
to become progressively more favorable for ho, feeders and for breei : opera-
tions. .re e.i:g operations for the 1937 spring pig crop from Septe.ber to
November this year, however, were undoubtedly sharply curtailed because of
the relatively low hog-corn price ratio then prevailing. With the gradual
increase in the price ratio, breeding operations from December to early March
may be expected to be on a somewhat larger scale, with the result that spring
litters will be farrowed, on the average, somewhat later than usual. The
total s-ring pig crop in 1937 is expected to be much smaller than that of
1936, but probably not as small as that of 19.7F. Unless another severe
drought occurs in 1937, the hof-corn price ratio next spring and summer will
probably become distinctly favorable for rather extensive breeding, with the
result that the 1937 fall pig crop, as well as the spring pig crop of 1938,
may be expected to show considerable increases over the 1936 fall and 1937
spring pig crops.
- 6 -
i.tle 1.- Hogs: ALverag price per 100 pounds of r.ckur and shi_ ...r purchases at
Chicago and at seven Icaiing markets, 1934-36
: Cc : So ven leading
Date : Cicao :1 :. r:cts
S1934 : 1 : 1936 : 1- .. ,.
o D dollars Dollrrs Dollars Doll,-rs
uqG. .................: 5.89 10.78 10.06 9.84
Sept. ................: 6.82 10.95 9.89 0.66
Oct. ................: 5.60 9.83 9.55 ..27
No7. ................: 5.66 9.31 9.48 0.20
S.*/ onr'cd 1/
; v. 7 ...............: 5.63 9.08 0.45 9.13
Nov. 14 .............: 5.78 9.24 9.49 0.15
Nov. 21 .....is.......: 5.68 9.42 9.43 9.19
11 v. 28 ..............: 5.63 9.52 9.49 9.28
Dec. 5 ..............: 5.69 9.75 9.73 9.50
/ -1. T ; crroopy 'i: r lTCoks in 1034 nd( 1 35.
Table 2.- HoCs: Nunibcr slu, -htoro( under T*_-orrl inspection, S. tc:bor-I: .: r r
1'..6 with c prisons s
Month : .-32
h* i ad
1934 : 1.. : 1936
Sept. .........: 2,918 2,601 1,453 2,403
Oct. ..........: 3,688 3,545 2,135 3,;.,
o7. ..........: 4,105 4,312 2,422 4,_
Ttl 3 : unths .........: 10,801 10,458 6,010 10,187
Dur ru cf ._ni.ia1 Industry.
1 3.- ;.7or:C live :oi ;ht of ho.Ls cn.r r:i: ows as a orccntca;c of total
packcr rnd shipper purchase at sc-n landir;; :arkc ts, 1 -
_-- -' .
:) :- r u n: percent t cIt packer
Date li veci ht and shipper .: scs
--.---. ,-. F--- rccnt -'cent
: : I un s :. 1.1....nn
................. : 2i1
.................: : 242
I .. .................. : 209 2
Neck ..c l../0 :00
....7. 7 ........... .20 -.
I :.7,. !4 ..............: 209 f
I .. 21 ..............: 204 1 1
Dec. ............. .: 200
Table 4.-Average price of corn at
C 'i;:a.o and hog-corn price ratios,
i .v. ......... :
Average price per
bushel of No. 3
Yellow corn at
Hog-corn price ratios based on 1/
:North Central: United
Chicago : States farm : States
prices : prices : farm prices
Bushels Bushels Bushels
1/ Number of bushels of corn
Table 5.-Pork and lard:
Total pork .....
equivalent in value to 100 pounds of live hogs.
Stocks in cold storage on December 1, 1936,
Table 6.-Pork and lard: Exports from the United States, August-October,
1936, with comparisons
Item and : Average : : :
month : 1924-28 : 1929-33 : 1934 : 1935 1936
: 1,000 1.000 1.000 1,000 1,000
: pounds pounds
Aug. .........: 35,223 17,131 15,965 6,785 6,105
Sept. .......: 32,532 14,242 9,949 4,659 4,207
Oct. ........: 29,522 13,949 8,641 4,656 4,249
months ...: 97,277 45,322 34,555 16,100 14,561
Aug. .........: 57,000 42,871 29,755 3,470 6,119
Sept. .......: 60,688 46,110 31,701 1,553 7,876
Oct. ........: 54,042 52,415 27,096 2,769 10,536
months .... 171,730 141,396 88,552 7,792 24,531
Compiled from records of the United States Department of Commerce.
l1 Includes bacon, hams and shoulders, and fresh, canned, and pickled pork.
2/ Includes neutral lard.
UNIVERSITY OF FLORIDA
I 3 122 l ll08llll08 II8
3 1262 088617534
HOGS: AVERAGE PRICE AT CHICAGO AND FEDERALLY
INSPECTED SLAUGHTER, 1934 TO DATE
NOV. DEC, JAN. FEB. MAR. APR. MAY
*PACKER AND SHIPPER PURCHASES
JUNE JULY AUG. SEPT
NEG 31979 BUREAU OFAGRICULTURAL ECONOMICS
U S DEPARTMENT OF AGRICULTUtR
SLAUGHTER SUPPLIES OF HOCS INCREASED GREATLY IN THE
LAST THREE MONTHS LARGELY BECAUSE OF LIQUIDATION AND
EARLY MARKETING RESULTING FROM THE 1936 OROuGHT. THE
DECLINE IN HOG PRICES SINCE SEPTEMBER, HOWEVER, HAS BEEN
ONLY MODERATE DESPITE THE LARGE INCREASE IN SUPPLIES,
THUS INDICATING FURTHER IMPROVEMENT IN DEMAND. IT IS
EXPECTED THAT HOG SLAUGHTER DURING THE REMAINDER OF
1936-37 WILL BE SHARPLY REDUCED AS WAS THE CASE I1 1934-
35 FOLLOWING THE DROUGHT OF 1934. AS SUPPLIES ARE RE-
DUCED, HOG PRICES tN 1936-37 ARE LIKELY TO ADVANCE AND
THE COURSE OF HOG PRICES THIS YEAR MAY BE SOMEWHAT SIMI-
LAR TO THAT OF 1934-35.