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Maximum Swine
Marketing Ltd. Newsletter


Hog Commentary for May 1st, 2006

Hog Markets
Cash hog prices in US were quoted notably higher over the past week with Midwest regional bids climbing over $5.37 US /cwt. Midwest cash bid have increased by more than $12.00 US/cwt in the past 2 weeks kicking off a strong seasonal rally. Meat values were also reported higher measured by the cut-out which showed gains of $3.01 US/cwt. Cash prices gained more than meat values which caused packer margins to tighten significantly. This fact however is normal for this time of year and looking back at the same period last year, packer margins were negative $8.97/cwt. Slaughter came in at 2.2% above last year but could be a result of increased kill to make up for the smaller May 1st kill due to immigration marches.
Lean hog futures responded to the higher cash trading firm in most contracts confirming the seasonal rally. Market hog flows have entered a time period that are being affected by the record heat of last year which could lead to further support in the cash over the near term. Lean hog futures for the 4th quarter of 2006 are trading within $1.00 US of contract highs providing hedging opportunities for hog producers looking to reduce risk for the end of this year. May ended the week with the most gains, up 2.70, Jun through Dec were as follows: 1.27, 1.22, 1.10, 1.20, and 0.70 higher.


Feed Markets

Cash soymeal prices were supported by a big day in the futures on Monday which saw most contracts $4-5 US higher following the bean market. July soybeans are trading near $6.10 US per bushel from the Apr 10th lows of $5.68 per bushel. This increase has been attributed to the threat of reduced acres due to excellent corn planting progress. Fund buying and technical support has limited losses in the complex which also found support from impressive crush numbers released last week. Although increased crush would imply weaker meal markets due to increased volume the strength in oil and beans have more than compensated for that affect.
July corn futures were 4 cents per bushel higher than a week earlier as of Monday’s close finding strength from a firm cash market which has had similar gains to the futures due to slow farmer deliveries. The 4 cent gain as of Monday however was taken back at the open Tuesday following planting progress reports released Monday afternoon. Planting progress for US corn has moved to 52% complete versus the fast pace of 2005 which had this week at 49% and well above the 16-year average of 46%. Weather forecasts encourage further advances to the current pace indicating more corn acres may be planted versus the estimates made earlier this spring. If so prices may be susceptible to selling pressure as the tighter supply situation projected for the end of this year could be eased with more grain in the ground.