Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for March 22nd, 2005

Hog Markets
The recent slide in cash slowed over the week posting marginal gains in most regions. Sharp declines in cash bids at the beginning of last week aided packer margins which moved from negative territory to profitable levels. A steady cutout allowed for the improvements in margins. With grilling season approaching values for pork are expected to continue trading higher adding to the overall tone in the market.
April futures traded in line with cash this week while summer and fourth quarter contracts remained steady awaiting new information. Varying pre-report estimates for the Quarterly H&P report out on Thursday, have the market trading in a tight range this week. Position taking ahead of the report may lead to weakness in the futures but potential adjustments to Dec and Mar sow numbers could lead to upside following its release.

Feed Markets
Soybean and meal markets nearly reached nine month highs one week ago as large fund buyers increased exposure to commodity markets. Since the peak on Tuesday the market has seen four days of weakness triggered by weaker demand numbers and long liquidation from the funds. Weather concerns in South America are becoming less of an issue and interest is shifting towards US planted acreage numbers, which are currently pegged at 2 million below a year ago. Profit taking in the market seems to be slowing and fundamentals should have more of an impact for the coming week.
As has been the case for some time now, corn followed soybeans quite closely over the past week. Strong exports from China and the burdensome world feed grain stocks helped to start the bearish turn. US planted acres are estimated to be up to 82.8 million acres from 80.9 last year. This increase is largely at the expense of soybeans, and corn will continue to trend closely with the beans to avoid losing acres. As world commodity and energy prices continue to rise there will be support for corn, but it will take an average or lower crop to see a reduction in stocks.