Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for May 8th, 2006

Hog Markets
Cash hog prices in US were quoted slightly lower over the past week with midwest and national bids softening after their run up the past couple weeks. The recent softness can be associated with immigrant rally providing more then enough hogs for the lighter kill schedule this week. Midwest cash bids declined approximately $0.97 US/cwt and national prices were approximately $1.20 US/cwt. Unlike cash, cutout gained throughout the week and ultimately increasing packer margins. Slaughter came in at 2.7% lower then last year but 9.0% higher then the week previous.
Lean hog futures responded to the lower cash bids trading weaker then in the past weeks. Market hog flows remain in a time period that was affected by the record heat of last year which could lead to increased support in the cash over the near term. Traders are reluctant to put value into the market due to the uncertainty in the protein market and bird flu concerns. Thus, they put more weight on the short term issues such as cash and slaughter variations, which has contributed to the recent market volatility. May ended the week down 1.35, Jun through Dec settled as follows: 0.22, 1.02, 0.42, 0.82, and 0.65 lower.

Feed Markets
Cash soymeal prices ended slightly lower for the week ending Monday May 8th, as Monday’s session moved nearly $2 lower on estimates that soybeans would be reported near 25% planted in Monday afternoon’s spring plantings progress report. Monday afternoon’s report actually came in with soybeans only 18% planted, behind both last years and the 16 year average, which resulted in strong gains off the open Tuesday morning.
Corn futures saw significant declines as July fell 11 cents/bu. Corn planting progress as of Monday was 70% complete across the US, up 18% from a week earlier. The incredible planting pace has been the main trend for price direction lately, as 70% planted in below last years report of 75% but still above the 16 year average of 66%. Continuing positive weather reports remain throughout the Midwest corn belt for the remainder of the week which may result in still more downside potential, as more corn acres may be planted than previously expected, taking away from the large soybean estimates