Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for November 1st, 2005

Hog Markets
Cash hog bids were lower in most regional markets with packers reporting ample hog supplies to fill kill schedules. Cutout was quoted as slightly higher from the previous week, which may be an indication that demand has been strong enough to absorb the increases in pork production. Slaughter has been higher than 2004 levels 4 weeks of the last 5 contributing to the lower cash markets. Expectations are for steady slaughter numbers from this point through to the end of 2005. This will support cash prices going forward, however weights remain higher than last year which will offset some of the lower slaughter impact on prices.
Lean hog futures experienced a week of volatile trade. The market was down significantly on Wednesday and Thursday but bounced back on Friday. The volatile trade is expected to continue in the short-term as avian flu and foot & mouth concerns are now being considered in the market place along with uncertain fundamental information. All contracts except April finished the week off higher with nearby Dec up 0.72 US/cwt.

Feed Markets
Cash delivered soymeal prices remained the same over the past week as futures traded in a narrow range with little new information entering the market to create a trend. The industry is awaiting the next USDA Supply/Demand report to be released Nov 10th with expectations of increased yields and production numbers. The harvest season is wrapping up in most northern Midwest states with favorable weather reported for the majority of this year’s harvest. Slow rail movement and increasing fuel costs have delayed soymeal deliveries over the past few weeks and may contribute to higher prices in the weeks and months ahead.
The corn market traded 5 consecutive days of new contract lows before beginning this week with a day of fractionally higher trade. Little has changed in the corn market from previous weeks; talks are still centered on big production and ending stocks well over the 2 billion bushel level for the upcoming season. Cash prices found small upside from firming basis numbers and rising transportation costs. Last reported weekly exports dropped over 200K mt from the previous 3 week average indicating slow movement into foreign markets pressuring local prices. Harvest season approaches completion and will likely have its most negative effect on price over the next month.