ECONOMIC   INFORMATION
FOR  INDIANA  FARMERS
No. 37
Division of Agricultural Economics
April, 1947
THE HOG SITUATION
Hog prices, with usual variations, probably will continue near the
April 1 levels through the summer. More-than-the-normal seasonal
decline in hog prices may take place the last quarter of 1947. Even
though hog prices may decline to lower levels, prospective supply
and demand conditions would appear to justify the breeding of
normal numbers of sows for fall farrow.
General Statement
This report deals with the hog situation through the next 12 months. Producers who are now breeding sows for
fall farrowing must appraise this 12-
month period in deciding how many
sows to keep. This period is rather critical in that some adjustment and realignment of prices in general may
occur during this period. No one can
foresee with certainty the exact date
of the downturn in business. However,
the indications for a weakening demand and for lower hog prices after
early fall are sufficiently strong to justify the culling of heavy sows and for
bringing the hog enterprise to normal
levels while hog prices are high.
Demand Expected To
Weaken In Late 1947
The demand for pork and pork
products is expected to continue strong
during the summer and early fall
months of 1947. A sag in demand is
probable in late 1947 or early 1948
due to a decline in business activity
and consumer income.
Industrial activity during the first
half of 1947 is expected to average
higher than for any six month peacetime period or record. During the second half of the year, however, business activity and consumer income may
taper off.
Important forces now operating
which seem to indicate a downturn in
business in the latter part of 1947 or
early 1948 include a steady decline in
the purchasing power of salary and
wage earners, consumer resistance to
rising  prices,  high  production  and  a
record rate of inventory accumulation
in most lines. As a wider variety of
industrial goods becomes available in
increasing quantities, they will tend to
compete with meats and other food
products for the consumer's dollar.
Furthermore, cattle marketings are expected to increase as the year progresses and this may weaken slightly the
demand for pork.
It is recognized that there are certain elements operating to maintain a
high level of business activity for some
time to come. The more important of
these include the huge backlog of
needs for housing, automobiles and
some other types of consumers durable
goods and an anticipated high level of
exports, particularly industrial goods.
Some increase in credit purchases and
installment buying by domestic consumers also seems likely.
Weighing these and other conflicting forces seems to point to a downturn in overall business activity and
consumer incomes in the next 6 to 12
months. However, business activity and
consumer incomes are expected to be
sustained at above pre-war levels. As a
result, demand for pork and pork
products likely will weaken. However,
the drop in demand will not likely be
great enough to cause hog prices to
fall to support levels within the next
year.
Wide Fluctuations
Can Be Expected
With hogs at present prices and with
unsettled domestic and foreign conditions, wide day-to-day and week-to-
week fluctuations in hog prices may be