Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for February 16th, 2005

Hog Markets
Cash and futures traded lower again this week as the market corrected from its second highest levels in over eight years. To sustain valuable prices further into 2005 packers were forced to drop cash bids in order to solidify positive margins. With cutout holding just under $70.00 US/cwt cash prices look to find support in the weeks ahead.
Futures contracts from June through the end of 2005 have not been affected by the lower cash prices as of late. June posted small gains this past week while Dec dropped less than $1.00 US from contracts highs which were reached during last week’s trade. Near-term prices may see another week of lower bids however the seasonl downturn looks to find support once into the spring months.

Feed Markets
New lows in the nearby corn futures led to reduced cash prices at the beginning of the month, however small gains have been noted in both the cash and futures market over the past week. Support came from oversold conditions and the lack of follow through selling after the USDA released 2004/2005 ending stocks at 2.010 million bushels compared to 0.958 million last season. Demand from ethanol production is projected to increase again this year helping to consume the massive stocks available to the feed market. Price climbs will be limited to weather premiums in the coming months.
Soymeal futures made advances higher over the past week as reaction to the USDA S/D report was positive rather than the forecast weakness. The confirmation of large grain stocks in the US and world markets were not enough to continue the sell off seen since the beginning of the year. Changing weather patterns in South America to dry conditions lifted local soymeal and bean prices due to a heightened level of concern over final production numbers from these regions. Soybean availability has not changed in the US and will continue to provide an overall negative tone in the market, however as SA approaches harvest and the US approaches planting, weather returns to the market after being absent for over 5 months. The overall tone is negative however sharp bounces can not be ruled out.