Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for September 20th, 2005

Hog Markets
After several weeks of volatile trade due to lower than expected slaughter numbers and holiday weeks, cash hog prices took a breather ending nearly unchanged from the week earlier. Price decline preceded firm bids into the weekend as packers were forced to put more money on the table to attract enough hogs to fill a 65K Saturday kill. Positive packer margins are driving big kill schedules which are exceeding 400K head per day. Seasonal increases to hog flows are expected in the weeks and months ahead however total weekly slaughter is not expected to surpass 2004 levels.
Nearby lean hog futures were also relatively steady, Oct starting the week within cents of last Monday. Contracts into 2006 traded to new highs in all months and remain within 1-2% of the top price. Trade is anticipating a glut of animals to come to market before depressing the futures however with decreased flows of Canadian weanlings and extreme heat from the past summer, the expected glut may not materialize holding prices at current levels or better.

Feed Markets
Cash soymeal prices dropped to their lowest level so far in 2005 with futures in 2006 providing the lowest forward contractible price for the net year earlier this week. A move to well over 85 cents in the Canadian dollar added to the cheaper price tag on soymeal providing hedging opportunities for end users. With trade forecasting an average crop on the horizon, ending stocks are not expected to become a major concern unless harvest progress is altered by weather. If delays are seen in harvest and grain quality is affected expect a rally in price to curb demand.
Seasonal pressures kept nearby and new crop corn futures trading with a negative tone during the week as US harvest progress moved to 11% up 5 from last week. Crop conditions improved slightly to 52% but remain well below the 15-year average of 61%. News released late Friday indicated that the Canada Border Services Agency will start a formal investigation into alleged injurious dumping and subsidies associated with US corn growers. Flow of product is not expected to decline until more is known from the International Trade Tribunal who will also begin and independent investigation.