Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for March 1st, 2005

Hog Markets
Cash hog prices climbed another $3.00 US over the past week as demand for cash hogs continues to be strong from the packers. Increased needs from the retail level ahead of Easter supported the current price trend. Bids are expected to weaken slightly but remain near record levels for this time of year. Cutout levels were lower this past week pulling packer margins into negative territory which may add to steady trade.
Lean hog futures reached new highs in the Jun and Jul contracts over the past week indicating the markets anticipation for continual high prices through the summer. The nearby April continues to carry a $5.00 US premium over the cash market. Contracts for the fourth quarter of 2005 remain range bound trading near the high end of averages for those months.

Feed Markets
Corn futures rallied cash prices this week supported by a sharply higher move in the soybean market. A question as to the level of acres for the 2005/06 corn crop has the market trading with uncertainty, given the large ending stocks still expected at the end of this marketing year. The recent bounce in corn prices is expected to subside once planting is complete however until then, an early weather premium appears to be making itself known. Delivered corn quality has increased over the past two weeks as the recent price surge has increased farmer selling and country movement.
Another week of higher futures drove cash soymeal prices to 3-month highs. Forecasted rains for south-central Brazil were again non existent over the weekend adding more stress to the already depleting soybean crop. Final yield and production concerns have spurred offsetting of the net short position held by the funds who are now net long the market following the run up over the past two weeks. Volatility involving weather will now be present in the market through US planting. End users of soymeal should use the latest market action as an indication of the markets ability to change due to weather. Any weakness in the market over the next two months should be viewed as an opportunity to lock in soymeal for the summer months.