Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for April 26th, 2005

Hog Markets
Overall demand for pork has decreased over the past three months due in part by improving poultry supply, a small appreciation of the US dollar and a general increase to total pork availability versus last year. These three factors can be quantified in the recent devaluation of the summer lean hog contracts. Although futures for Jun and Jul have been reduced contracts for the last three months of 2005 remain near contract highs.
Cash prices remained steady for another week limited by the value of pork and the lack of profitable margins for US processors. Weekly slaughter dropped 1.2% and may continue to see seasonal declines as packers report kill cutbacks. Although prices have been limited with upside the current cash hog price remains near the top for this time of year, only below 1997 and 2004 when calculated at a national level.

Feed Markets
Soybean and soymeal futures moved significantly higher over this past week based mainly on technical trading and speculative buying. May soymeal futures closed at $200.00 US per short ton, the highest close in over a month. Cool wet weather throughout the US Midwest has triggered concerns about planting delays after the very quick start to the season. As seeding progresses, the risk premiums that are being built into the market should decrease if planting goes smoothly. Aside from the minor seeding delays there has been very little fundamental news in the soy market over the past few weeks. As a result of this, fund activity and technical trading has played a larger role in moving prices. The weekly price change was dominated by one day of significantly higher futures along side three steady days. What had been terrific planting weather up until a week ago has since turned around and has been quite cool and wet across most of the US Midwest. Planting has been reported at 30% which is behind last year’s record pace of 35% but still well ahead of the five year average of 22%. Planting needs to reach 50-60% by the first week of May to historically ensure trend line yield potential. If growers continue to experience delays over the next two weeks there is the potential that acres will be taken out of corn and put into other crops such as soybeans. Export demand has been slightly firmer, but the next two weeks of planting will continue to be the focus of the market.