Quarterly Prediction Models for Live Hog Prices

Pronounced short-run movements in production, marketings, slaughter and prices of live hogs create problems of uncertainty in the decision-making process of producers and other participants in the hog-pork industry. The objective of the present study was to develop quarterly prediction models for live hog prices, based on structural relations representing the price-determining forces in the sector. The relative importance of the hog sector in the livestock industry is underscored by the fact that the annual cash income for the sector ranks second to beef. For instance, in 1970, hogs accounted for about 15 percent of the total cash receipts from all livestock products. About one-half of total hog production in 1970 was in the seven states of West North Central Division, with Iowa accounting for almost one-fourth of all hog production in the United States. This division, along with four continguous and six southern states, accounted for about 90 percent of the total U.S. hog production. Although the total consumption of pork has increased over past decades, pork has represented a smaller percentage of total meat consumption. The per capita consumption of pork has shown no appreciable increase since the middle fifties, while that of beef rose steadily during the period.