There is a powerful tendency for production to occur in CYCLES.
For instance I think I am observing a higher than usual number of new cars on dealers' show rooms with attractive deals being offered to move vehicles and natural gas supplies are currently high.
Of ALL production cycles, the hog cycles have been the MOST consistent for the longest period of time having first been observed by Samuel Brenner in 1876. Notice that I use the term "Cycles" because there are two cycles going on in the hog market at the same time. I refer to them as the "Hog Cycle" that has a periodicity of four to seven years and the "Hog Seasonality Cycle" that occurs every year. Below I have posted the Hog Seasonality Cycles for the past seven years and the last Hog Cycle High hit on 7/16/14 and the last Hog Cycle Low hit on 9/3/18.
On average over this seven-year period, the seasonality high was hit on July 1st with an average seasonality high of 98.20 and the average low was hit on December 20th with an average low of 57.89 giving an average peak-to-valley range of 40.33.
But -
There was a lot of year-to-year variations from these averages as you can see in the table below:
6/26/2012 $103.08 Seasonality High
9/18/2012 $67.63 Seasonality Low
6/20/2013 $104.25 Seasonality High
12/26/2013 $79.10 Seasonality Low
7/16/2014 $134.17 Seasonality High & Hog Cycle High
4/2/2015 $59.58 Seasonality Low
5/20/2015 $83.26 Seasonality High
12/31/2015 $52.88 Seasonality Low
6/28/2016 $85.03 Seasonality High
11/21/2016 $47.79 Seasonality Low
7/12/2017 $92.84 Seasonality High
4/11/2018 $52.97 Seasonality Low
6/22/2018 $86.20 Seasonality High
9/3/2018 $45.30 Seasonality Low & Hog Cycle Low
8/12/2019 $101.78 Seasonality High, Estimated
12/14/2019 $89.73 Seasonality Low Estimated
Summer 2020 $135.00 Hog Cycle High, Estimated
At the bottom of the table are estimates of the next "Seasonality High" and the next "Seasonality Low". The source of these estimates are the August 2019 futures for the "High" and the December 2019 futures for the "Low". The estimate for the next "Hog Cycle High" is the last "Hog Cycle High". If the devastation to the hog population in China is as serious as it appears to be, it seems reasonable that the last "Hog Cycle High" will be reached or perhaps exceeded.
There are two very large risk factors on the horizon. Kim could drop a Nuke someplace and plunge the U.S. and China into a serious conflict and the ASF virus could hit North America.
With more than usual amount of fear and trembling, I am choosing to trade the hog market with long futures spread across the range of available futures contacts and to load my boat with calendar spreads that I will load and unload as the hog market moves up and down being driven randomly by the emotions of the day.
Best wishes,
Doc