Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for November 21st, 2006

Hog Markets
Regional cash markets were flat with a week earlier while national averages were reported as much as $3.00 US lower accounting for lagged market losses during the middle of last week. Packers became more aggressive with cash bids late Monday afternoon to secure hogs for Friday and Saturday kills. Kill levels are expected to reach over 300K head on Saturday to make up for downtime on Thursday due to no packers killing on Thanksgiving Day. Weekly slaughter was estimated 0.9% below 2005, the first week in over 3 months were slaughter was below the previous year. Cutout managed minor gains at the start of the week supporting cash markets as packers took advantage of processing margins in excess of $10 per head.
Lean hog futures were lower in most contracts but bottomed late last week posting moderate gains so far this week in response to firm cash. Upside is expected into the end of the week as packers aggressively bid for hogs and the futures market anticipate continued strength. Dec 06 through Dec 07 weekly changes in futures were as follows: Dec: -1.72, Feb: -1.83, Apr: -1.53, May: -1.17, Jun: -1.30, Jul: -1.05, Aug: -0.10, Oct 0.50 and Dec 0.37 all changes in US/cwt.

Feed Markets
Soymeal futures experienced a relatively quiet week with prices reported $3 US lower on profit taking since the release of a neutral USDA report which seemed to be the dominant factor in a relatively top heavy market. Soybean harvest as of Monday was 96% complete, slightly behind last years 99% but still ahead of the average pace for this time of year. Due to the recent spike in the soy complex an abundant supply of meal seems to be accumulating, resulting in relatively decent basis levels for the end user on spot loads. Consider filling short term storage on any breaks in the market.
Corn values managed to find strength once again, gaining for the week as the small correction after the USDA report has seemed to be short lived and the general trend still remains to be upward. Corn harvest progress as of Monday stood at 94%, behind last years 98 % but still ahead of the average pace of 90% for this time of year. The damp weather is still hampering with the eastern corn belts efforts to complete harvest as this is where much of the crop still remains in the field. The lingering factor behind rising corn prices still remains the concern for additional ethanol demand in years to come and a much needed increase in acres for next spring. The recent weakness in energy markets may limit upside in the grain market for the coming weeks.