Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for April 4th, 2006

Hog Markets
Cash prices were higher this week in select regional markets but due to the lag effect, national averages were lower. Cutout declined in value this week with a reported loss of $3.44 US/cwt. Packer margins narrowed as cutout declined in value more than cash but remain in positive territory as they have since July of 2005. Slaughter came in 0.4% higher then the same week last year which represented Easter week in 2005.
Lean hog futures found support on Monday following a friendly quarterly USDA hog and pig report released Friday after the close which pushed contracts higher for the week. The report disclosed that all hogs and pigs on farms in the US was 100.7% of Mar 2005, which was lower than industry estimates of 101.3%. Kept for breeding numbers came in at 101.4% and kept for market were 100.6% with industry estimates of 101.1% and 101.3% respectively. The biggest surprise to the market was the hogs in the weight range of 120lbs to 179lbs as they were reported as 99.6% of Mar 2005 when estimates were 101%. Despite the positive news from the USDA, lean hog futures will remain under some pressure as the amount of protein on the market remains burdensome. Apr ended the week up 40 points while Jun, Jul, Aug, Oct, and Dec ended the week -57, 0, +22, -7, and, -42 points respectively.

Feed Markets
Big acres estimated for the US soybean crop pressured futures late last week however losses in cash prices were kept in check by basis adjustments from Midwest crushers. Soybean acres are estimated to reach 76.895 million compared to average trade estimates of 74.217 million and last year’s 72.1 million. The negatives continue to build for the soybean and meal markets with South America taking off record yields in good condition along with the continued affects of bird flu on demand. Final acres to be planted in the US may be altered over the coming weeks as futures react to the latest reports. Buying opportunities continue in the soymeal market as summer and new crop contracts reached new lows during today’s session.
Sharply higher corn futures were the result of the USDA’s March planting report released last Friday which pegged US corn seeding at 78.019 million versus average trade estimates for 80.505 million. Futures were 7-8 cents per bushel higher on Friday and continued with follow through buying to start this week. Corn stocks as of March 1st were reported at 6.985 billion about even with projections. A higher corn board looks likely on more talk of demand from the ethanol sector and strong exports so far this year out of the US.