Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for June 13th, 2006

Hog Markets
Regional and national cash markets were sharply higher this past week as a lack of hogs and strong pork demand has provided an environment of higher product and cash hog values. The higher bids have pushed the regional cash market to its highest level since May 19, 2005. The ISM bids were $5.94 US/cwt higher for the week and the NBC was quoted as $5.08 US/cwt higher. Slaughter was reported 0.3% lower than a year ago and weights continue their slide as they were reported at their lowest level of the year. The lower slaughter pace, coupled with the decline in weights has decreased the total pork production and cutout values have been the beneficiary. Cutout, which is also at its high, was quoted as $6.29 US/cwt higher for the week
Lean hog futures, which set new contract highs last Monday, did not perform as well as cash. Nearby Jun and Jul contracts were higher for the week as they followed the strength in the cash market but deferred contracts came in flat to lower. Jun ended the week up $3.30 and Jul was up $0.70 US/cwt. The Aug contract was flat but Oct ended the week down $0.75, Dec down $1.02, and Feb down $1.00 US/cwt. The fundamentals indicate that the market will remain firm in the near-term which should allow value to be put in the deferred contracts and propel them to contract highs once again.

Feed Markets
Soybean plantings continue to come along at a good pace, coming in at 94% planted as of Monday evening. Decent moisture levels over the past week have had an effect on prices as weather patterns will continue to have significant effects on soymeal futures; however some dry patterns over the weekend strengthened price to start the week. Crop conditions have been reported at 67% good/excellent, down 3 from last week, as compared to 64% last year and a 16 year average of 63%. Warmer and drier conditions have been forecast for the next 7 – 10 days, but expect breaks on any rain in the forecast.
Corn futures have been following weather patterns extremely closely for the past week and there is no reason to expect this to change any time soon. Recent rains throughout the Corn Belt eased prices significantly however the recent forecast for hot and dry weather has turned futures around as of Monday afternoon. Crop conditions have been reported at 70% good/excellent, down 1 from last week, as compared to 67% last year and a 16 year average of 65%. Crop conditions like these are looking good and if the weather can continue to cooperate there is serious potential for a very good corn harvest this year, which may also provide some great pricing opportunities.