Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for May 17th, 2005

Hog Markets
After increasing prices sharply two weeks ago, packers were able to take prices back down last week leaving us unchanged from where we were two weeks prior. The volatility in price over the past few weeks can be attributed to poor packer margins and fewer than expected market hogs. Packer margins haved corrected themselves over the past week with cutout over $80 for the first time since December. Slaughter numbers still remain tight. We are expecting to kill 1.90 million head this week and bid up cash prics to do so.
The futures market has been steady and range bound for some time. It is unlikely that the futures will break out of their range this week, before a long weekend. If the cash market can maintain its premium to futures prices through the long weekend, prices could finally break out from their current levels.

Feed Markets
With the Canadian dollar resuming its slide and falling into the 78 cent range, cash soymeal into Canada has increased by nearly $10.00 Can per mt. After losing value towards the end of last week, a correction higher on Monday has left futures nearly unchanged for the week. The market had been building a large net short position on reports of good planting and favourable weather. Dry forecasts and moderate short covering fueled the correction in the futures market. Soybean planting numbers that were realeased after the market closed Monday reported seeding to be 46% complete. This figure came in slightly above expectations and although below last years record 51%, it is still well above the five year average of 39%. Good planting numbers and news that China will not be revaluing its Yuan in the near future will likely provide some bearish news as the week progresses.
Corn futures have continued to trade lower setting new contract lows multiple times this past week the lowest being Friday. The news of the week was the May futures going off of the board and the nearby month becoming July. Although July also was also at contract lows, at Friday’s close there was more than an 8 cent US/bu. premium to the May. With Monday’s move higher, the nearby futures close from Friday to Monday jumped from $1.95 ¼ to $2.07. Although planting progress for corn is very close to last year at 89% complete, much slower emergence and crop development numbers have offset the quick planting pace. This uncertainty may give the market some short term support but an overall bearish tone remains.