Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for June 21st, 2005

Hog Markets
Lean hog futures continued to fall last week, but cash hog prices finally started to show some signs of improvement. Cash trade was firm supported by the need for hogs by packers who have indicated supplies are steady but not burdensome. Slaughter increased slightly from the week before and remains 1.2 % above year ago levels. Pork production however reached 3.6% above the equivalent week in 2004.
The market is expected to be steady this week as most participants eagerly await Friday’s USDA Hogs & Pigs Report. Pre-report estimates are for moderate increases across all categories. If the past is any indication of what we could expect, in similar years of the hog cycle, 1997 and 2001, the lean hog futures market traded limit-up following the June H&P report.

Feed Markets
Soybean and soymeal futures had yet another strong week with July soymeal futures rising $21.00 US per ton during the period of June 10th to the 20th. This run has the market now trading at or very near contract highs across the board. The forecast for continued dry weather and the underlying Asian rust concern remain the major fundamental supports for this rally. The firm tone in the market continues to be only a risk premium as planting progress is above average and at 96%, is even ahead of last years pace. Crop conditions also remain at 63% good/excellent, level with the 15 year average. A firm Canadian dollar over the past week has helped reduce the effect on Canadian cash meal prices, but another week of hot dry weather will likely start to reduce yield expectations for the current crop.
The corn market which has been fairly stable over the past number of weeks in comparison to the soy market saw an increase of $0.25 per bushel US from the 10th to the 20th of the month on the July contract. The same concerns over the hot and dry weather that are surrounding the soy market have continued to drive corn prices higher as well. Although the move is not to contract highs, it does have most contracts trading at the highest levels since early March. The June 20th USDA crop conditions report actually has improved the rating for the current corn crop, and again most of the market influence is tied to the forecast.