Hog prices have dropped sharply in the past month, falling from about $67 per live hundredweight in early February to $58 recently.

Futures prices have followed suit, with April lean hog futures dropping about $7.50 since the beginning of February.

These declining prices raise concerns over the spring price recovery and whether that recovery will be strong enough to push hog prices up to breakeven levels as had been expected.

Supply is not the culprit.

Over the last four weeks, pork production has been down nearly one percent compared to the same weeks a year-ago. With smaller supplies over this four week period, prices have been $3.80 per hundredweight lower than during the same period in 2012.

This means price weakness is coming from demand concerns.

The first of those concerns is the weakened buying power of U.S. consumers. Unusually high gasoline prices for this time of year and increased payroll taxes since Jan. 1 have reduced the buying power of consumers.  

Secondly, the recent discussions around potential furloughing of federal meat inspectors due to sequestration have probably had a numbing effect on hog prices. If plants were to shut down some days they would not buy hogs for those days, thus weakening hog prices.

However, the largest demand concerns are a result of recent trade issues.

Pork exports have become a very important part of hog prices. In 2012, the volume of pork exports represented 23 percent of total U.S. production.