Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for July 11th, 2006

Hog Markets
Regional and National cash prices have slipped from their highs 3 weeks ago due to packer induced lower slaughter levels and a short week. The ISM was quoted as $0.17 US/cwt lower for the week and the lagged national prices were approximately $1.33 lower. Packers have been successful in enhancing margins in the past number of weeks and are now making in excess of $14.00 US/hog. In effect, cash prices could turn up once again as the short week is now behind us and packers will increase their kills. Weights have been reported as flat for the past 3 weeks at approximately 262.6 lbs which is an indication that marketings are current.
Lean hog futures declined this week due to the recent slide in the cash market following its seasonal rally. Jul ended the week $2.27 US/cwt lower and now holds a premium to the cash market. The premium indicates that the market expects cash to increase slightly into July expiry on Monday July 17. This week featured strange summer trading with value taken out of the nearby months while the deferred more volatile contract months remained relatively flat. The Aug through Feb contracts ended the week as follows: Aug ended down $3.22, Oct down $2.30, Dec down $1.15, and Feb down $0.12, all prices US/cwt.

Feed Markets
Soymeal prices continued their sideways trade throughout the majority of the week as futures failed to sustain any prolonged upside or downside momentum. Nearby futures fell just over $3.00 as mid-week rains pressured the market marginally lower, however a change in weather forecasts early this week have turned prices around and are beginning to find some support. Soybean good/excellent crop conditions declined 6% from a week earlier to 58% yet still above the 2005 rating of 54% which produced last years record yielding crop. Buying on any weather breaks is recommended to minimize the risk in the weather driven summer months.
Corn futures traded much the same as soybeans throughout the majority of the week, however once minimal moisture and heat entered the forecast, corn began an uptrend as it is currently in its critical silking stage, where tough weather conditions could severely effect this falls yield. Corn good/excellent crop conditions declined 5% from a week earlier to 63% yet still above the 2005 rating of 58%. Current g/e crop conditions are slightly below the 16-year average of 67% and the 5-year average of 64%. Silking in the U.S. is currently at 23% which is exactly on the average.