Besides several thousand internet sales on the FCE (generally $3 to $4 lower), cash cattle activity on Wednesday was limited to a light volume of dressed trade in parts of the North (i.e., $210 to $215, $6 to $11 lower than last week's weighted average basis Nebraska). Asking prices Thursday are likely to start out around $135 to $138 in the South and $215 to $220 in the North. Live and feeder futures are likely to open moderately lower, pressured by defensive action in both cash cattle and beef cutouts.
Look for hog buyers to resume procurement chores Thursday morning with basically steady bids. Processing margins appear to be improving this week as packers are doing a better job in controlling the cost of market hogs on one hand and selling pork cuts higher on the other. Lean futures seem staged to open moderately higher, supported by strengthening product demand and light bull-spreading interest.
| BULL SIDE | BEAR SIDE | ||
| 1) | Spot June live cattle futures managed to close back above support at $122 on Wednesday. Many traders continue to believe the board is cheap enough. | 1) | Dressed cattle sales in the North broke hard again at midweek (i.e., $210 to $215, $6 to $11 lower than last week's weighted average basis Nebraska), reflecting a panicky psychology in feedlot country that may be building. |
| 2) | Spooked by political instability and uncertainty surrounding the Trump Administration has caused the dollar to fall to a six-month low, possibly a good thing for U.S. meat exports. | 2) | For the first time in weeks, beef cutouts closed sharply lower with relatively sluggish midweek box movement. |
| 3) | For the week ending May 13, Iowa barrows and gilts averaged 282 pounds, 1 lb. lighter the previous week and 1.3 lbs. under 2016. | 3) | For the week ending May 13, 2017, U.S. hatcheries set 224 million eggs in incubators; up 3% from a year ago. At the same time, chicks placed totaled 182 million chicks; up 2% from 2016. |
| 4) | The pork carcass value surged more than $2 higher on Wednesday with all primals scoring significant gains except the belly. | 4) | The inability of lean hog futures to tap follow-through buying Wednesday (even given constructive fundamentals) reinforced overhead chart resistance. |
CATTLE: (Chicago Tribune) -- McDonald's said Wednesday it has expanded delivery via UberEats to about 270 restaurants in Chicago and about 700 more nationwide, a move aimed at winning back younger consumers willing to pay more for food brought to their doors.
"McDelivery" is also now available at about 300 restaurants in Los Angeles, 144 in Phoenix and 59 in Columbus, Ohio. McDonald's started testing delivery in several Florida cities in January, and said last month it planned to roll it out "to a number of U.S. cities this quarter."
Delivery is a tricky proposition for McDonald's. UberEats' delivery charge is $5, more than nearly all of the chain's menu items. There's also the risk that a customer might be disappointed with soggy fries or a warm soft drink.
But McDonald's executives say that delivery is successful because the huge number of locations — it has 14,000 nationwide — doesn't leave much room for the food to get cold.
"When we first started considering delivery, food quality was our top concern," said Bill Garrett, McDonald's vice president of global delivery. "But when you look at our real estate footprint, we are so close to so much of the population, delivery times are very tight. We're getting great reviews (of the food)."
Nearly 75 percent of the U.S. population lives within three 3 miles of a McDonald's restaurant, according to the company.
Delivery also has the possibility of jamming up restaurants at peak times, slowing down service. But Nick Karavites, a McDonald's franchisee who operates 22 restaurants throughout the Chicago area, said the systems put in place behind the scenes ensure that orders stay organized and don't sit too long. Much like curbside pickup, which McDonald's plans to roll out later this year, Karavites said delivery orders won't be made until an UberEats driver arrives, ensuring the food is fresh and hot.
Karavites said he's also expecting higher sales at restaurants that offer delivery.
"We're talking about a customer that was going to stay home that day," he said. "We're widening the net to be convenient to more people."
The world's largest burger chain believes that "McDelivery" is a critical piece of its plan to win back lost customers. McDonald's said the other keys to improving traffic also involve technology: The chain is rolling out mobile ordering by the end of the year, and renovating its restaurants to add ordering kiosks and table service.
HOGS: (brownfieldagnews.com) -- New research resulting from the PED outbreak in pigs shows the potential for PRRS and other viruses to be spread through feed.
Swine Health Information Center (SHIC) executive director Dr. Paul Sundberg says the study examined the ability of multiple pathogens to contaminate ingredients like soybean meal and dried distillers grains.
"Just about all the veterinarians who worked with PED looked at that outbreak and said it sure looked feed-related in some manner. Because it broke at just about the same time in multiple locations, and the only common input is feed." The study was conducted by Pipestone Applied Research and South Dakota State University.
Sundberg emphasizes this is only a model and says the next step involves mitigating threats with feed additives.
It could be added to feed as it's milled in order to take out those viruses, neutralize them, and make sure that they won't be getting to the farm from the mill and infecting pigs."
Sundberg tells Brownfield this is a very important risk factor no one has looked at before, and their mission is to figure out how to prevent pathogen transmission via feed.
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