Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for January 12th, 2005

Hog Markets
The price for hogs rebounded sharply following Christmas and is now 15% higher than the lows of December 23rd. The strong gain in the cash market has been added by severe winter weather, which limited marketings during the past two weeks. In the short term, the market is expecting to see lower cash hog prices as deliveries catch up following weather delays. Longer term high cash prices are still expected. The February lean hog contract is carrying a $4.00 premium to the cash, or $0.80 per week for the next five weeks.
The more distant contracts have also found support since Christmas. The lean hog contract at a contract high of $59.30 on Monday. This is considerably less than the value the Dec ¹04 contract expired at, by much higher than were it traded at this time last year ($51.00).

Feed Markets
Soymeal prices moved higher last week, but are still well below last year¹s price. Soymeal prices for the same week last year (fob Decatur) were $237/ton, 46% more than the current price. The market in soymeal continues to move sideways as fundamental information weighs in on both sides of the market. Some forecasters have trimmed Brazilian production numbers sue to Asian rust and dryness in the south of the country. At the same time there are concerns over Asian demand amid new avian flu cases.
Corn prices remain range bound as the market awaits Wednesday¹s Quarterly Gain Stocks report from the USDA. Pre-report expectations are for December stocks to be 9.289 billion bushels, and ending stocks to be 1.886 billion bushels. Both of these would be higher than last year¹s numbers at 7.954 and 1.844 billion bushels. Without any new bullish news, the corn market could give back all of last week¹s gains and then some if the numbers come in higher than expected.