Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for December 27th, 2005

Hog Markets
Bids for live hogs across the Midwest were steady following the holidays while losses from the prior week showed up in national averages which were reported $2.35 US/cwt lower than last Monday. The lag effect in national pricing was the reason for lower prices in that market. Slaughter for the week ending Dec 23rd totaled 2.052 million as kill schedules remained relatively normal with the holiday falling on the weekend this year. Monday, Dec 26th saw very few hogs slaughtered limiting gains in the live hog market.
Feb futures have traded range bound since coming on the board as the lead month nearly 2 weeks ago. Directionless trade has been the result of relatively steady cash and thin trade during the holiday season. Summer contracts have retreated from their highs trading $3.00 from the top reached back in early December. Seasonal weakness is contributing to the losses however with cutout holding steady cash and futures are expected to return to pre-holiday levels once into the New Year.


Feed Markets
Nearby soymeal futures traded with gains totaling $5.00 US over the past week as index fund money continues to find its way into commodity based futures. Short covering added to the recent upside which has moved the market into slightly overbought conditions. Technical traders have now defined the soy market as up-trending indicating resistance levels higher are the next objective of the market into 2006. Fundamentally the US soybean market is negative however as rains miss dry areas of Argentina, an early weather premium looks to support prices into 2006. Brazil received good showers over the weekend bringing overall moisture ratings to normal but Argentina is the big concern with some regions calling for localized showers during this week. With weather back in the market, end users need to price soymeal on breaks when rains occur and ease concerns for a failing crop.
Major support was reached in the low $2.00 US per bushel level for the nearby Mar corn futures and the market has traded higher since reaching those levels over 2 weeks ago. Strength in the soy complex helped bring corn off its lows earlier this month but now is finding support from short covering and end user pricing. The market has traded through significant resistance levels and may continue to do so, given the recent price trend. Although ending stocks are forecast at record levels for the upcoming marketing year domestic demand from increasing ethanol production and a strong export pace could limit the downside going forward.