This is in contrast to sea- sonal patterns, which are recurring production or price changes that take place within a year. Hog Production Cycles Hog production cycles exist primarily because hog producers respond to changing economic conditions in the hog business. When hogs have been profitable for awhile, producers as a group begin to expand production to take advantage of the expected profit opportunity. In the very early stages of expansion, the increase in gilt holdback may further reduce slaughter temporarily and add to the price strength. Expansion typically continues until larger supplies cause prices to drop to unprofitable levels for most producers.
Some producers respond by either cutting back on their production or by leaving the hog business.
Liquidation of sows and smaller gilt retention add to slaughter supplies as the expansion phase of the cycle ends. As a smaller breeding herd is later reflected in smaller supplies of pork, prices normally trend higher again, profits improve and the stage is set for another period of cyclical expansion. Hog prices are not the only determinant of profitability. Changes in production costs, particularly of feed, also affect profitability and can contribute to cyclical production trends. Usually, there is a considerable time lag from when hog pro- ducers begin to respond to changes in hog profitability until there are actual changes in the level of pork production.