Marketing Ltd. Newsletter
Hog Commentary for
November 29th, 2006
Cash markets were firm into the end of the week following the
US Thanksgiving holiday. Packers were aggressive with bids to
secure hogs for a large Saturday kill which reached 297,000
head. Regional bids continued firm Monday however calls for
lower cash surfaced Tuesday morning as hog flows remained more
than sufficient to packers looking to manage positive margins.
The short week resulted in a slaughter of 1.972 M up 4.6% from
the same short week last year. The increase indicates how much
capacity has grown over the past year which at one point was
a very limiting factor to the US live hog market.
Lean hog futures managed to recover most of what was lost the
week prior. Upside came from optimism in the cash and underlying
support from higher grain/feed markets which reached new highs
over the past week. Dec 06 through Dec 07 weekly changes in
futures were as follows: Dec: 1.72, Feb: 2.00, Apr: 2.13, May:
2.82, Jun: 2.47, Jul: 2.65, Aug: 2.47, Oct 2.00 and Dec 1.63
all gains in US/cwt.
Soymeal futures experienced a relatively quiet week
with prices reported $4 US higher. Meal futures found strength
throughout most of the week however the market was rather thinly
traded due to the US Thanksgiving holiday, being closed one
day and closing early for two sessions. Spillover strength from
other grains added support to the soybean complex which also
combined with good export sales and seasonal trends. The long
term trend for soymeal depends highly on next years planted
acres for beans but appears to be higher given the high demand
for corn and the likelihood of increased corn acres in the year
Corn also had a relatively strong shortened week, gaining 8.75
cents, and like meal rose nearly every session. Strong energy
and metal markets Fri contributed further gains to grains sector.
Corn harvest progress as of Monday stood at 97%, behind last
years 99 % but still ahead of the 16 year average for this time
of year. Ethanol demand and much needed corn acres for 2007
planting continue to provide underlying support to the market
and will continue to do so till traders anticipate significant
2007 production has been secured.