Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for March 27th, 2006

Hog Markets
Cash prices were lower again this week with both, regional and national cash prices losing some ground. Regional prices (ISM) declined by $3.41 US/cwt and national prices were $1.59 US/cwt lower. Cutout on the other hand increased in value, ending the week $0.31 US/cwt higher. Slaughter came in 0.5% lower than last year but due to higher weights pork production was 0.3% higher than a year ago.
Lean hog futures continue to struggle as the short term news remains bearish with an abundance of protein on the domestic market. The monthly cold storage report was released last week and came in bullish for pork with less pork in storage than expected. This indicates that pork is still in demand, both in the domestic and export markets, however the cold storage report was not as friendly for both poultry and beef. The abundance of competing meats will keep pressure on pork prices for the short term. The nearby Apr contract was $1.25 US/cwt lower for the week, while Jun, Jul, Aug, Oct, and Dec contracts were mixed at -0.05, +0.04, +0.37, -0.42, -0.72 respectively.

Feed Markets
South American soybean harvest continues at a good pace, adding stress to the US soy complex, however weekly export sales have held strong over the past couple weeks offsetting any significant South American influence. Near mid week soymeal futures experienced a correction form three and a half month lows which added some strength to the market, and once again experienced a correction in Mondays session. A lack of any real fresh news has kept the markets down side potential rather limited, as the current market is paying close attention to the constantly improving moisture conditions throughout the Midwest US.
Nearby corn futures rose 3.5 cents per bushel over the past week as the market has appeared to have over reacted to last weeks reports of improved soil conditions across the Midwest corn-belt. Increasing ethanol production has been adding to the recent corn market strength, however this news is being heavily offset by abundant supplies, continuing bird flu scares, and constantly improving spring planting conditions. Feed grains costs are still favoring hog producers, and coverage into the spring planting season should be strongly considered if not already done.