Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for October 11th, 2005

Hog Markets
Cash hog prices were lower in the regional markets but unchanged once again in the national average. Cutout was quoted slightly lower from a week earlier with seasonal weight increases, supporting the meat supply, which has been a negative factor on product values. Although product values were lower cash prices for meat and live hogs remain higher than normal for this time as year as pork remains in high demand, both domestically and internationally. Slaughter has surpassed that of 2004 for the second week in a row, but several weeks of higher slaughter will be needed to justify a significant move lower in cash prices. Canadian weanlings remain in high demand in the US as high hog prices and cheap feed combine for very attractive profit margins.
Lean hog futures were strong for most of the week setting new contract highs almost every day. Thursday and Monday were the only down days leveling Oct and Dec with last week’s close. The slightly lower cash quotes, combined with higher pork production pressured the 2006 contracts early but the surprisingly strong demand lifted 2006 lean hog contracts higher for the week.

Feed Markets
After taking a significant fall on Tuesday of last week, soybean and soymeal futures traded firm into the end of the week. As the bean harvest continues to move along nicely in the US, strong yield projections continue to weigh on both the bean and meal markets. Strong CBOT crush margins however have recently lent support to the otherwise bearish market. With the Canadian dollar showing weakness for the first time in recent weeks Canadian delivered soymeal prices have increased from this time last week. All eyes for this week are on Wednesday morning’s USDA crop report which is expected to show a significant increase in both projected production and ending stocks. Buying opportunities could become very attractive over the next week should a bearish report be released.

Corn futures have continued to trade lower over the past week with most contract months at or very near contract lows. Weak export demand and the continuing harvest of the bumper US corn crop have played a big role in the on going weakness. With the release of Wednesday’s USDA crop and supply/demand reports, it is expected that both production and ending stocks will be adjusted higher.