Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for April 25th, 2006

Hog Markets
Cash hog prices in most regions of the US traded notably higher over the past week with Midwest regional bids climbing over $7.00 US /cwt. Decreased hog flows and lighter weights were noted as factors contributing to the firm market. Meat values were also reported higher measured by the cut-out which showed gains of $3.60 US/cwt since last Monday. Packer margins were squeezed slightly as cash made head way over the cutout but demand appears consistent from the retail level supportive to meat values going forward. If exports are any indication of pork demand prices will continue higher into the summer months. Last reported monthly pork exports for Feb 06 were up over 20% from a year earlier indicating good movement of pork to foreign markets.
Lean hog futures responded to the higher cash trading firm in most contracts however traders continue to mention the premium June carries over the cash as a limiting factor to the gains in that contract. If cash continues to climb during the next 4-6 weeks summer futures will appreciate further. A supportive cold storage report was released last Friday indicating less pork in storage from last month and also reduced stocks from last year. Lean hog futures for the 4th quarter of 2006 are trading within $2.00 US of contract highs providing hedging opportunities for hog producers looking to reduce risk for the end of this year.

Feed Markets
Soymeal futures on Monday traded $5 below a week earlier as volatility continues due to weather and changing planting estimates. Although prices were down from last week futures posted gains over the past couple of days due to advancing corn planting and favorable seeding conditions that could see more corn in the ground versus soybeans. The recent appreciation of the Canadian dollar to 88.50 US has lowered deliverable cash soymeal prices in the spot and forward contract markets.
Corn futures continued their retreat from the highs as planting progress advanced to 25% complete versus 9% last week. The current pace is slightly ahead of the long term average of 22% but behind last years 28% at this time of year. Weather for the next week is forecast to be favorable as some traders anticipate a move above last year’s fast seeding rate. If weather does cooperate prices will continue to drop as increased acres will be likely at the expense of soybean acres. The removal of the tariff on US origin feed corn last Tuesday, April 18th allows all producers to utilize this source of feed excluding additional duty costs. Producer selling at the farm level has slowed in the past few weeks firming basis levels as farmers take time to plant this year’s crop versus hauling last years to the elevator.