Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for August 30th, 2005

Hog Markets
Cash hog prices maintained recent gains trading to the highs of early May and surpassing cash levels of 2004 at this time. Cutout is trading near $75.00 US per cwt providing positive packer margins allowing for the strong bids to daily prices. Hog weights continue to struggle providing fewer pounds of pork to the market, a result of summer heat lower US productivity.
Nearby futures are trading an $8.00 US discount to the cash market pricing in a drop from now until the middle of October. Seasonally the spread between cash and futures is on the wide side indicating cash markets as holding up very well during this period. Slaughter estimates for the end of the year range from 1.5% above 2004 and others equal to 2004 levels. In either case strong export demand is forecast to consume any excess pork on the market limiting downside to seasonal declines.

Feed Markets
Futures continued lower this week in beans pressuring average daily prices for cash soymeal. With the recent appreciation of the Canadian dollar cash delivered soymeal prices into Canada dropped to their lowest levels in 2005. Weather is a wild card at this point as hurricane Katrina moves inland dumping heavy rains in the Delta and eastern corn-belt. Some analysts see the rains as beneficial to late maturing crops while others consider the excess moisture as a burden to harvest progress in the south. Seasonally soymeal prices will likely make a small move higher as premiums are added for the harvest period. Soybean crop conditions were rated at 53% g/e up 1 from the week earlier but below the 15-year average of 56%.
Weekend weather ahead of the hurricane brought rain to Midwest regions that may be able to benefit from the moisture. Timing appears quite late in the season to benefit production to any major degree however an overall negative tone has held corn from making any advancements during the past month. Crop conditions increased slightly this week up 2 to 52% in the g/e category. The JD/Pro Farmer crop tour reported finding late last week projecting this year’s corn crop at 10.161 billion bushels with an average yield of 136.6 bu/acre. The last USDA monthly report estimated the 2005/06 corn crop at 10.349 billion.