This is the fifth liquidation since 1983 and all have started with the December report. Let s see what we can learn from previous hog cycles that may apply to the current market environment. Profits and Breeding Herd Expansion begins after about a year of profits.
Liquidation begins after about a year of losses.
Losses began for many producers in November 1997. Liquidation first showed up in December 1998. Following the reduction in the breeding herd, hog slaughter remains larger than the earlier year for a while. Prices Prices show a greater percentage change than do supplies. Prices are typically lower than the year before for 1-2 quarters following the start of a liquidation.