Despite unexpectedly large volumes of slaughter hogs coming to market in the US during the fourth quarter of 2016 live hog prices experienced a counter seasonal rally.

Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, observes the market has generally leveled off and hasn't seen much in the way of declines or support since the start of the new year.

Tyler Fulton-h@ms Marketing Services:

Kind of on the same vein wholesale pork prices, which can have a pretty significant influence on the underlying value of hogs, have been relatively steady as well.

We haven't really seen any major shifts in values.

While packer margins are roughly half of what they were about two months ago, they're still very profitable.

The cash market is really primarily focused with the heavy hog supply.

It's expected that, over the course of the first three to four months, we're going to be looking at a hog supply that's about three to four percent larger than year ago levels.

That's almost now kind of taken as a given.

It was a bit of surprise when that information came out from the USDA about a month ago and so now the market's kind of absorbed it and is probably more focused now on the demand side and the aspect of demand that seems to be the most uncertain is export demand.

Fulton says the biggest uncertainty in terms of export demand is plans to renegotiate the North American Free Trade Agreement.

He notes Mexico consumes about eight percent of all American pork produced, in the event of a trade war pork would likely be among the first US commodities Mexico would apply tariffs to and any such disruption would likely have an immediate impact on cash markets.