Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for June 7th, 2005

Hog Markets
Cash hog prices stabalized in the back half of last week as packers looked to fill Saturday kill schedules to make up for lost production on Monday. Weekly slaughter came in above the equivalent week last year indicating hog supplies remain ample heading into a typically decreasing supply time period. The March Hog & Pig report indicated fewer slaughter animals during late June and July which the market does not anticipate by the recent devaluation of the nearby futures.
Nearby June lean hog futures continued to drop as cash prices remain weak with expiry only 5 days away. Contracts for the fourth quarter appear to have found a near term bottom trading higher for three consecutive sessions. Forward price opportunities are likely to present themselves within the next month for production later this year as analysts anticipate a short term recovery in futures.

Feed Markets
After seeing most soymeal contracts repeatedly set new contract highs over the past few weeks, the run higher has stabilized somewhat with today’s prices mostly steady with this time last week. The market is in an extremely overbought situation which has lead to minor selling and profit taking that has at times limited gains. With temperatures in the mid 90’s across a good portion of the dry areas of the eastern corn belt, what little moisture is there is quickly disappearing. Scattered rains are forecast for the region over the weekend and this seems to be just enough to limit new buyers in the market. Weather will continue to cause volatility in the market with funds waiting to see which direction to go.
Over the past number of weeks the corn market has continued to follow the soy complex closely as the weather issues concerning the soybean crop are very similar to those facing this year’s corn crop. Much of last year’s record yield was attributed to very early planting and the absence of extreme heat which may have been overlooked. With temperatures forecast to be in the mid 90’s in many parts of the already dry state of Illinois, the need for moisture will become increasingly urgent. The week ahead looks to be much of the same with all eyes on the weather.