Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for April 12th, 2005

Hog Markets
The hog markets, both cash and futures fell last week on declining cutout values. Lower cutout values reduced packer demand for live hogs pulling futures lower with the cash. The April to July contracts were down the most, while the Oct and Dec were only marginally lower. So far this year, slaughter is 1.5% higher than last year, and is expected to continue at this level until the end of May.
After May expectations are for slaughter to be steady to slightly lower than last year through the end of 2005. The steady slaughter numbers are the product of a stable sow herd in the US and diminished Canadian exports. In spite of the steady projected slaughter for year end, prices are expected to be below last year’s level. A spring rally in the Dec contract that pushed it into the mid-60’s would be good protection for the end of the year.

Feed Markets
Soybean and meal markets were considered oversold at the end of last week after reaching the lowest level since late February. Good planting conditions in the US and average weather in Brazil for soybean harvest added to the negative tone. US soybean exports have preformed well in light of ample supplies coming out of South America. China is reporting an increased need for beans however as occurs every year, purchases will move from the US to South American product. USDA Supply/Demand reports released Friday lowered soybean ending stocks for the current marketing year to 375 million, down from 410 a month earlier. Stocks to us ratios dropped by 1.4% to 13%. Hog producers buying hand to mouth heading into the summer will have the opportunity to purchase soymeal at yearly lows if weather remains favorable for the upcoming US soybean crop.
An increase to ending stocks, reported at 2.215 billion bushels versus 0.958 billion last year, continued to pressure nearby and new crop corn futures to within a cent of contract lows this past week. On the heels of increasing acre and stock reports came the Supply/Demand numbers which generated more selling in the market. Heavy weight good quality product has surfaced as corn producers look to rid themselves of last year’s crop. Weakness is fully expected though planting unless major delays are seen and final acres estimates are adjusted.