Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for October 21th, 2004

Hog Markets
The price for hogs has continued to fall over the past week as packers find supplies easy to come by. Even after three weeks of lower cash hog prices, we are all still at the highest prices for this time of the year since 1996. Demand for hogs continues to be strong, and packer margins have improved substantially in the past few weeks. Once supplies become more difficult to find, packers have the ability to increase hog prices, while still maintaining positive margins. The flow of market hogs is expected to diminish over the upcoming weeks to levels comparable to last year.
The US Department of Commerce (DoC) announced preliminary antidumping duties against the import of live hogs from Canada last Friday. The tariff will be 14.06% of the import value of the animal. This applies to all hogs both weanlings and market hogs with the exception of breeding stocks. The antidumping tariff is payable by the importer of origin when the hogs cross the border. The tariff will be in place until the ITC releases its final determination at which time a tariff could become permanent, or removed altogether. If the tariff would be removed at this time, US importers who had put up cash or bond would be eligible for reimbursement.

Feed Market
A quiet week in corn futures following late Tuesday¹s USDA report had new crop Dec training today within a cent of the close on the 12th of October. Contract lows for the December were set this week at $1.97 US per bushel with no major upward movements expected. Exports and domestic consumption will begin to enter the market as price determining factors once a greater level of harvest has been completed and final production is determined. Corn users should continue to hold off long-term purchasing while the market absorbs the large 2004/05 US corn crop.
New crop soybean and meal futures traded lower late last week pressured by advancing harvest, reported at 71% complete on Monday versus 58% last week. High Yield averages reaching over 50 bushels/acre in some regions across the Midwest has the market bracing for record production numbers. Upside is limited in the soy complex as world production numbers begin to rise with increasing estimates for the 2005 South American crop. Hog producers who have covered a portion of soymeal requirements on the recent collapse in price should hold off pricing any further product, remaining in the cash market for the non-hedged portion of required soymeal.