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CONSENSUS
A.G. EDWARDS & SONS, INC.
One North Jefferson, St. Louis, Missouri
314-955-3068(November 18, 1999) HOGS: Wholesale beef prices hit their highest levels since May 1993 during October. That strength probably caused grocers to switch their buying to pork, which in turn pushed the hog and pork markets sharply higher in early November. Demand was obviously very strong since prices rose just when slaughter rates typically move toward annual highs.
The contrast to last year is quite dramatic. Massive slaughter and seemingly mediocre demand forced late 1998 prices to their lowest level since the early 1940's. Current slaughter remains very high, but finally began running below year-ago levels in late October. We expect the fourth-quarter kill to be the second-largest on record (behind the fall-winter 1998 total). As mentioned, improved demand has apparently made the difference. Given the major analytical difficulties a change in demand creates, we admit to a great deal of ambivalence concerning the hog outlook. As such, we prefer to watch developments from the sidelines.
Dan Vaught