Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for October 4th, 2005

Hog Markets
Cash hog prices were steady in regional markets but reported slightly higher in the national average. Demand from packers has reportedly leveled off as packer margins dropped from the highs during mid September. Cutout was also unchanged from a week earlier with meat supplies increasing as weights return to pre-summer levels and even with 2004. For the first week in over 3 months slaughter exceeded that of 2004, but several weeks of higher slaughter will be needed to justify a move lower in cash prices. Until then hog producers can expect steady prices and strong demand for weanlings.
Lean hog futures started the week sharply higher trading to near limit up levels on Monday following the release of the Quarterly Hogs & Pigs report on Friday. As of Sep 1st All Hogs and Pigs were reported at 100.0%, Kept for Breeding at 100.2% and Kept for Marketing at 100.0%. The USDA estimates came as no surprise to the industry but fund buying continued to propel futures to new contract highs.

Feed Markets
Cash soymeal prices were slightly lower from a week earlier with losses reported within $2.00. Progress and condition reports released Monday after the close contributed to lower trade Tuesday of this week sending nearby and 2006 contracts down between $3-4 US. Soybean harvest progressed to 36% complete even with the 15-year average while good to excellent acres improved by 1% from a week earlier. Blended cash prices for the next 12 months are approaching average costs for years similar in production and usage with 2005/2006. Upside is limited until more harvest is complete and yields are confirmed but the overall negativity during the harvest season looks to be present al least for the next couple of weeks.
Corn futures were reported slightly higher from the Monday before but as seen in the soy complex on Tuesday prices were pressured by major weakness in other US grain markets. Corn appears to have found a floor supported by slow producers selling and fund buying near the $2.00 US per bushel level implying a flat market until a greater amount of harvest is complete. Progress reports released Monday afternoon pegged corn at 26% ahead of last year’s pace of 23% and the 15-year average of 20%.