Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for April 5th, 2005

Hog Markets
Lean hog futures fell slightly this week after hitting new contract highs Friday of last week. The July, August, October, December and Febtuary contracts all hit new contract highs last week in advance of the ITC injury determination on Wednesday of this week. Since the preliminary tariff on Canaian hogs was levied in early October market hog export numbers have fallen by 11% and weanling export numbers have fallen by 10%. Should the tariff stay in place and the most recent Hogs & Pigs report is correct and no expansion is taking place in the US, slaughter for the end fo the year will be less than in 2004.
Cash hog prices have started to imporve since the Easter long weekend. Over the past week prices have increased by $3.00 and are expected to continue climbing through the month of April. The April futures contract, as well as the May and June contracts have a premium realtive to the cash. The only concern at this time is the cutout, which has been falling. Cutout values will need to imporve in order to facilitate a cash rally.

Feed Markets
The soybean and soymeal markets had a dynamic week centered around the March 31st USDA grain stocks and acreage report. The report showed planted acreage slightly higher than expected at 73.9 million acres but strong demand numbers lead to an overall bullish tone. The market saw strong gains Wednesday and Thursday before a complete reversal on Thursday’s close. Heavy profit taking and fund selling has since slowed but a slightly lower tone has continued to start the week. Wet weather in Brazil is causing concern that there could be harvest delays seen, but the expectations for a large US crop are keeping the market relatively steady as we lead into Thursday’s USDA supply/demand report.
Like the soy complex, corn also experienced a bearish USDA report with planted acres coming in about 1 million below what was expected. Corn stocks numbers were reported slightly higher than expected but could not make up for such a decrease in planted acres. Profit taking also sent corn futures lower late last week and into this week as funds continue their long liquidation. The possibility of planting delays in the US due to wet weather will be watched closely over the next few weeks, but as long liquidation continues a run higher will be tough.