Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for August 2nd, 2005

Hog Markets
Hot weather across most of the American Midwest has resulted in lighter animals coming to market decreasing the amount of pork available for retail. Cut-out vales have performed well as a result trading with small gains daily, maintaining values above $72.00 US per cwt. Packers have been forced to increase overall bids to attract hog to fill kill schedules. The start of this week, however will likely see lower cash bids due to the Canadian holiday and increased hog flows across the border along with a rolling holiday in the US causing 3 plants to go dark for the day.
Lean hog futures were sharply higher at the start of this week trading to some of the highest levels since late May. Oct closed Monday at the daily limit on short covering, technical buying and talk of increasing demand potential due to foreign disease concerns. News of avian flu spreading from Russia to Europe and swine fever in China has caused the market to not rule out another summer of strong demand for North American pork.

Feed Markets
Nearby soymeal futures have traded range bound for just over two weeks as the market attempts to put a value on the potential damage done by the recent heat wave in the US. Pollinating soybean crop are likely to begin the major yield setting process this week and continue for the next four weeks. If temperatures remain in the high 90’s for much of August prices will need more than the current premium to ration supplies. End users should be prepared to lock a portion of next years supply requirements at current market levels as protection against the potential weather threat. Basis levels narrowed this past week sending cash prices higher as US crushers begin to talk about supplies issues and the decreasing availability of spot soymeal.
Nearby Sep corn futures are unchanged from a week earlier however in the past 2 weeks reached a high of $2.62 US per bushel. Pollination amidst severe temperatures has the market worried about decreasing yield potential. Although trade assumes abundant acres and projections for 2.0 billion bushel ending stocks the market could face high volatility into the harvest months. Crop condition reports released Monday afternoon pegged good/excellent acres at 53%, steady with the week prior but well below the 15-year average of 65%.