Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for May 26th, 2005

Hog Markets
Cash hog prices fell again to start this week and will likely be lower for the third consecutive week. The drop in the cash has coincided with lower cutout values and weak future prices as well. The drop is a normal seasonal movement that occurs most years in the back half of May, once product has been placed for the Memorial Day long weekend. Prices are expected to start moving higher by the middle of next week once packers start buying agressively again and the lost day of slaughter in the US on Monday supports the cutout.

Feed Markets
Cash soymeal prices were driven higher this week as weather entered the market as a major contributing factor. Temperatures have been below seasonal normal and have inceased the concern for supply numbers this year. Current soybean acre estimates require a 40.8 bushel per acre yield to maintain current ending stock numbers and with poor growing conditions lower yields would justify higher prices. The weather rally is likely to continue until conditions improve and can be expected to trade with high volatility throughout 2005 due to the sesitivity of bean supplies. End users of soymeal should set targets for soymeal requirements through to the end of 2005 and beginning of 2006 at levels seen prior to the most recent rally.
Planting progress advanced very near completion for the US corn crop however prices surged to 4 week highs in the nearby contract on major weather concerns. Emergence is being reported very low due to the dry and cool weather being seen across much of the US corn belt. Corn futures reacted to speculative buying but were set back slightly during midweek by commercials who took advantage of the monthly highs to market some of last years product. The Supply/Demand scenario for corn is much different than soybeans and as weather shifts during the summer months the premium in the corn market should dissolve.