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Maximum Swine
Marketing Ltd. Newsletter

Hog Commentary for November 29th, 2006

Hog Markets
Cash markets were firm into the end of the week following the US Thanksgiving holiday. Packers were aggressive with bids to secure hogs for a large Saturday kill which reached 297,000 head. Regional bids continued firm Monday however calls for lower cash surfaced Tuesday morning as hog flows remained more than sufficient to packers looking to manage positive margins. The short week resulted in a slaughter of 1.972 M up 4.6% from the same short week last year. The increase indicates how much capacity has grown over the past year which at one point was a very limiting factor to the US live hog market.
Lean hog futures managed to recover most of what was lost the week prior. Upside came from optimism in the cash and underlying support from higher grain/feed markets which reached new highs over the past week. Dec 06 through Dec 07 weekly changes in futures were as follows: Dec: 1.72, Feb: 2.00, Apr: 2.13, May: 2.82, Jun: 2.47, Jul: 2.65, Aug: 2.47, Oct 2.00 and Dec 1.63 all gains in US/cwt.

Feed Markets
Soymeal futures experienced a relatively quiet week with prices reported $4 US higher. Meal futures found strength throughout most of the week however the market was rather thinly traded due to the US Thanksgiving holiday, being closed one day and closing early for two sessions. Spillover strength from other grains added support to the soybean complex which also combined with good export sales and seasonal trends. The long term trend for soymeal depends highly on next years planted acres for beans but appears to be higher given the high demand for corn and the likelihood of increased corn acres in the year ahead.
Corn also had a relatively strong shortened week, gaining 8.75 cents, and like meal rose nearly every session. Strong energy and metal markets Fri contributed further gains to grains sector. Corn harvest progress as of Monday stood at 97%, behind last years 99 % but still ahead of the 16 year average for this time of year. Ethanol demand and much needed corn acres for 2007 planting continue to provide underlying support to the market and will continue to do so till traders anticipate significant 2007 production has been secured.