Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for June 6th, 2006

Hog Markets
Regional cash markets were sharply higher for this past week, which included the Memorial Day holiday. The higher bids more then offset the previous move lower with ISM bids quoted $4.26 US/cwt higher. Due to the lag effect, National bids came in only slightly higher for the week. Slaughter was reported 0.9% higher than a year ago but weights came in for the week nearly 1lb less then last year levels. Weights were reported at 266.8lbs, which is approximately 7 lbs less than the beginning of the year. The lower weights mean that there will be less pork per hog now, then when the weights were higher, which could support hog prices.
Lean hog futures gained significant value as fund buying and supportive fundamental information helped attract buying interest. Jun and Jul contracts hit multi-months highs and all other contracts trading set new contract highs on Monday June 5th. It is never a bad idea to add some protection when contracts have reached new tops but more upside could be in the works as cash and cutout remain firm and hog supplies seem to be tight. Jun ended the week up $3.35, Jul up $ 4.95, Aug up $4.67, Oct up $4.05, Dec up $2.85, and Feb up $2.50 US/cwt.

Feed Markets
Soybean plantings have been coming along at a relatively good pace and favorable near term weather had kept soybeans and soymeal in a narrow trading range till Friday’s session, where the meal market gained just over $10.00 as speculative buying and concerns over weather patterns triggered the sharp gains. Soymeal futures have risen to three month highs in the past week and are showing strength even though the crop conditions have been reported at 70% good/excellent, near a record high for this time of year. Expect soymeal futures to weaken in the short term as the weather forecasts have changed significantly in the past couple days, calling for hot and wet conditions which should prove beneficial for the young soybean crops.
Corn futures have been acting much the same as the soy complex lately, pricing in even the smallest change in the weather forecast, and the past few days have been no exception. Strong gains were priced in ahead of the weekend on hot and dry forecasts, only to be reversed on hot and wet predictions. Good to excellent corn conditions came in at 71%, which is off of any records, but well ahead of both last years pace and the 16 year average. Crop conditions like this combined with predictions of higher than expected planted acreage could lead to a lot more corn than initially expected, and may lead to some excellent pricing opportunities throughout the summer months, especially if the weather cooperates.