Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for August 1st, 2006

Hog Markets
Cash hog bids were steady in regional markets after dropping sharply at the start of last week, as live bids regained all value by early this week due to intense heat and slowing deliveries of live hogs. Lagged national prices did not experience the recent upswing in price due to heat and were reported down $3.40 US/cwt from last Monday. Midwest packers were forced to add money in order to fill scheduled kills but are rumored to be cutting back on slaughter later in the week which could contribute to softer prices.
Lean hog futures posted moderate gains as heat across the US spurred active buying in futures on ideas of reduced product and slaughter in the week ahead. Dec 06 through Jun 07 reached contract highs on Monday of this week supported by strong domestic and export demand. Cut-out maintained its value, holding over $70.00 US/cwt at the start of this week. Futures ended the week with the following gains Aug: 0.85, Oct: 2.05, Dec: 1.92, Feb: 1.40, Apr: 1.15, May: 0.90, Jun: 2.50, all prices US/cwt.

Feed Markets
Soymeal futures continued their pursuit for lower prices dropping to contract lows several days over the past week. High temperatures followed by rains are expected to benefit bean growth adding to potential production levels later this year. Major soybean producing regions appear to be in the path of two systems carrying 1-2 inches of rain which would only add to the potential of this year’s crop as it enters the sensitive pod setting stage. Crop conditions were down slightly from a week earlier but are holding steady with 2005. Volatility will be high over the next month but a lower bias continues until weather becomes less favorable for crop development.
Corn prices were unchanged from a week earlier trading within a narrow 9 cent range from high to low. Support in the market has come from impressive exports which have surpassed USDA projections indicating a potential adjustment higher in the Aug S/D report. Weather conditions have varied from extreme heat over the past weekend to forecasted rains for the days ahead keeping prices on the move. New crop futures reached significant support levels as analysts await more information about potential yields. Crop conditions dropped 3% over the past week reaching 56% in the good to excellent category.