Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for June 28th, 2005

Hog Markets
The USDA released the June 1 Hogs & Pigs Report Friday after the market closed. Most of the numbers came in as expected, slightly above last year’s numbers, with the exception of hogs ready for market in the fourth quarter. Hogs 120 lbs and lower came in at 99.7% of 2004, one percent below expectations. These hogs will be market ready in the fourth quarter of this year. Following the report both the Oct contract and the Dec contract traded limit up on Monday.
Monday’s gains in the futures market were mostly reversed on Tuesday as cash price and cutout values continue to disappoint. Packers are mostly full for this week and should have no trouble finding hogs next week, since it is a short week in the US. As a result cash prices, which have fallen for 8 consecutive days could continue to keep falling. The best way to hedge in the short term is to be a seller of the July contract.

Feed Markets
With weather being the major driver in most grain markets over the past number of weeks, the past 10 days was not an exception. Soymeal futures traded relatively steady to higher last week, ending the week at or near contract highs on most contracts. The dry weather that had been the major concern for the past few weeks had a drastic change for the better over the weekend, and forecasts for cooler and wetter weather sent soybean futures limit down across the board on Monday. Soymeal futures were down very near limit with this being the largest move either up or down in months. With weekly crop progress reports just starting to show damage from the lack of moisture, the rain was just in time to keep the crop from fading. Markets continued lower Tuesday with the July contract now down over $24.00 US per short ton since Friday.
Much like the soy market, corn futures also saw significant losses as a result of the wet forecasts. The USDA’s Monday crop condition report showed a reduction in the percent of the crop in the good/excellent category and the rain was seen as being just in time for a drought stressed crop. With futures dropping off of the recent three month highs, a more bearish tone has quickly entered the market. If weather continues to be wet as is forecast we can look to see further losses in both the corn and feed grain markets.