Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for June 14th, 2005

Hog Markets
Increasing meat values are expected for the week ahead supporting cash prices which posted gains over the previous week. After dropping most of late May due to large slaughter numbers and poor packer margins, cash is called firm as meat movement improves now into the middle of June. Cash hog trade typical for the third year of the hog cycle is likely to continue with firm prices for the next month before seasonal declines begin into the end of the year.
The June lean hog contract expires Tuesday, June 14 at noon with the cash index estimated at $67.50. Futures have traded range bound for the past week with producer hedging limiting gains in the fourth quarter contracts. Early industry estimates for the Quarterly Hogs & Pigs report to be released June 24 indicate increasing marketings and breeding herd. Although increases are expected expansion is called within 1% of the previous year.

Feed Markets
Soybean and soymeal futures continued their volatile trade this past week with the markets losing value for most of last week before gaining it all back following the weekend. The trade last week was dominated mainly by forecasts for much needed rains for the weekend in the eastern areas of the Midwest. Friday however, saw the release of the June USDA supply/demand report which further reduced soybean ending stocks by 35 million bushels. The reduction in ending stocks coupled with less than desired rains falling over the weekend was enough to send the futures higher to start the week. Monday’s upswing was enough to erase all of the previous week’s losses and has the deferred contract months trading back at contract highs.
The corn market traded lower last week being influenced by the lower soy market, and although corn traded higher Monday, futures for the week still remain lower. Friday’s USDA report left ending stocks unchanged and still remains extremely large. Monday’s crop conditions report also saw numbers in the good/excellent category improve over last week’s report. Although weather forecasts don’t look to be ideal, the market is saying it will take a large yield reduction to have an impact on the overwhelming world stocks.