The forecast error was defined as the actual price minus the forecast price. These forecasts were then compared to the Livestock Marketing Information Center (LMIC) calculated, weighted average market hog price of the first quarter 1999 through the fourth quarter 2008. The 10-year average Seasonal Index was based on the monthly average price for the same month as the report (i.e., December average price following the December report) to forecast a price for each of the next 12 months and then averaged into quarters. A price was forecast for each month and the three months were averaged into the quarter. The futures market forecast was evaluated by using the closing futures price one week after the hogs and pigs report was released and was adjusted for the previous 3-year average basis. The same day of each quarterly hogs and pigs report, ISU Economists forecast prices four quarters into the future and published these in the ISU Iowa Farm Outlook Newsletter. Table 1 summarizes the three forecasting methods described above for the 1999-2008 period. Because hog prices follow a fairly predictable seasonal pattern the current price coupled with this historical relationship can be used to forecast prices, as another option. The resulting futures prices represent a “composite” forecast at a particular point in time. Another forecasting method is the lean hog futures market, a single location where anyone with an opinion on what prices will be in the future can essentially vote their forecast by taking a position in the market. Using information from USDA reports, historical relationships between supplies and price, and current market conditions, they provide a forecast of what prices may be in the future.

Iowa State University and other land grant institutions often forecast commodity prices. Pdf Hog Price Forecast Errors in the Last 10 Years: The Lean Hog Futures Market & The Seasonal IndexĪ major purpose of livestock price forecasts is to reduce the risk associated with decisions that producers make.

Quarterly hog and pig report