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.