Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for February 23rd, 2005

Hog Markets
Cash prices started the week with a firm tone after finishing more than $3.00 higher last week. The higher prices last week were the first time in a month that cash prices were higher week over week. The improved cash is a result of increased demand for live hogs from packers. The improved demand is expected to continue through this week since most packers are still in need of hogs to fill out slaughter schedules for the end of the week.
The April contract is at a $5.00 premium to the cash. Between now and the expiry of the April contract the average change in the cash over the past 5-years has been $1.94. Unless the cutout is able to increase at the same rate as the cash market this week, it will be difficult for the cash to climb up to the current level that the April is priced at. The more deffered contracts continue to be range bound in small volume. The Dec contract has been trading in a $1.00 range since the middle of January.

 

Feed Markets
Cash corn prices were steady following the US long weekend settling unchanged from week ago levels. Futures were held to minor gains while the soybean market pushed higher on South American weather concerns. A large net short position leaves the market vulnerable to a bounce if prices are able to close above technical resistance. Major rallies in the market are likely to be kept in check. However as planting nears in the US, and SA weather conditions become a major concern, prices may see more volatile trade compared to the previous months trade. End users not wanting to ride out the volatile trade usually associated with spring weather premiums should consider pricing a portion of corn requirements for 2005.
The lack of yield supporting rains in South America drove soybean and soymeal prices higher in Canada and the US during the past week. Scattered rains in southern regions of Brazil are not being considered enough to ease the stress of maturing soybean crops. Soymeal futures have now appreciated $20.00 US per short ton off the lows set in early February. Increased volatility is expected from this point forward incorporating weather in both North and South America. Soymeal contracts through the end of 2005 offer good value for end users and should be considered on any weakness from the markets current value.