Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for March 30th, 2005

Hog Markets
Cash hog prices fell $1.50 last week going into the long weekend. Now that Easter is behind us, the expectation is that prices will start to improve by the end of the week. Slaughter for the past four consecutive weeks has been below a year ago, and packer margins have improved. While the cash price fell heading into Easter, cutout values increased, producing better packer margins. A weekly kill smaller than last year, and positive packer margins should yield higher prices by the end of the week, and a possible rally in both the cash and futures marget going into April.
The USDA released its quarterly Hogs & Pigs report on Thursday of last week. All hogs and pigs were reported at 101.1% of last year, those kept for breeding were reported at 99.7% and those kept for marketing were reported at 100.7% of a year ago. The numbers were in line with expectations and are expected to have a positive impact on the Dec and Feb contracts. The market is now waiting for April 6th to find out the ITC verdict on injury casued by dumping of Canadian hogs into the US.

Feed Markets
Cash soymeal was pulled down by lower futures and improving basis levels prior to the long weekend. Increasing availability of soybeans allowed crushers to improve basis however crush margins although positive are nearing break even indicating a move back to less attractive levles. Talk of strong demand from China and impressive export numbers have supported the recent climb while good harvest weather in South America and ample grain stocks keep the market from surging higher. Planted acre estimates to be released Thursday are pegged near 73.4 million down 1.8-2.0 million from last year. End users should prepare for higher meal prices during the spring as weather premiums add to bean prices.
Corn prices continue to trade without direction awaiting planting estimates for the upcoming crop year. Early projections have US corn pegged near 82.5 million up from 81.0 last year. Exports for the last month have exceeded the necessary levels needed to reach USDA estimates for the year providing underlying support. Upside however appears limited if planted acres do exceed last year’s levels and the large ending stocks exceed the 2 plus billion level projected.