Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for March 15th, 2005

Hog Markets
Volatility has increased over the past two weeks, resulting from fewer than expected hogs coming to market. Packers increased bids significantly in the first half of last week but found they still could not find the quantity of hogs they needed. The higher cash in the first half of the week pushed packer magins well below break even, this resulted in a sharp drop in cash prices late in the week. Prices are expected to be soft from now to Easter, with a strong rebound in the cash market after Easter.
The USDA will relaease it quarterly Hogs & Pigs report on the 24th of the month. Early estimates are for all hogs and pigs to be 0.4% more than one year ago, the breeding herd ot be 0.2% larger than a year ago, and market hogs to be 0.4% larger than a year ago. The market has already priced in a moderate increase in numbers going forward. Should actual numbers be close to estiamted numbers, futures prices should be steady to higher following the report.

Feed Markets
After seeing a trend lower in soybean and soymeal futures in through the middle of last week, the market shot significantly higher on Friday. The USDA supply/demand report that was released on Thursday showed strong export demand and a further reduction in South American production numbers. The gains on Friday put us to levels we had not seen since July of 2004. Monday’s trading gave a slight correction but as the large funds continue to buy into the commodity markets there will continue to be support.
The USDA supply/demand report for corn gave a far more bearish tone than it did for the soy complex. US corn ending stocks were raised by 45 million bushels to 2.055 billion, and production numbers were increased in both Argentina and South Africa. The market however did not react to these numbers and continued higher in Friday’s market. With the recent rally in soybean futures there is a concern that there is still time for US farmers to switch corn acres to soybeans. The corn futures, especially the new crop months will continue to track the new crop soybean market to avoid losing acres.