South Dakota's Hog Market: Developments and Prospects

This paper examines the developments that have occurred in South Dakota's swine industry and offers insights into its future prospects. Data, trends, and literature related to this market were gathered in an effort to fill in specific gaps about South Dakota's market. Nationally and in South Dakota there are fewer producers raising hogs. The exit of relatively small producers from the industry reduced a seasonal spike of farrowings during the March-May quarter in recent years. A growing trend of inshipments, where feeder pigs are brought into South Dakota, finished, and marketed, has partially offset the reduction in farrowings. An analysis of a longstanding indicator of supply, farrowing intentions, reveals that the closer intentions reported were more accurate than the distant intentions and that the overall accuracy is impressive. The general price level for market hogs at Sioux Falls follows a similar pattern to U.S. prices. A seasonal trend exists at Sioux Falls, with prices higher from May through August. Analysis of location basis, the difference between the CME Lean Hog Index and the cash price at Sioux Falls, with prices higher from May through August. Analysis of location basis, the difference between the CME Lean Hog Index and the cash price at Sioux Falls, also reveals a seasonal trend and substantial variablity across different months. Knowledge of basis is necessary when comparing different markets and when determining the effectiveness of risk management tools.