Market watchers who were willing to stay late
enough on Friday eventually saw the development of moderate trade volume
in most areas of cattle-feeding country. Furthermore, even maximum
foot-dragging by packers could not excuse them from the need of spending
more money for ready inventory. Most dressed deals in the North were
marked at $195, as much as $5 higher than the previous week's weighted
average basis Nebraska. Most live sales in the South were reported at
$123, as much as $4 higher than the prior Friday's market test in Kansas
and Texas.
Beef packers Monday will limited efforts to the
assessment of new showlists. Our guess is that the offering will be
steady to somewhat larger than last week. Market weather through the
first week of January across much of the central Plains is anticipated
to below normal.
The cash hog trade seems staged to open the
holiday-disrupted week with bids steady to $1 lower. Market ready
barrows and gilts remain plentiful with questions of adequate pork
demand still up in the air. With plants dark Tuesday, you can bet that
well-margined packers are planning another large Saturday kill, possibly
close to 400,000 or better. Lean futures are likely to open on a mixed
basis thanks to better seasonal optimism on one hand and pre-existing
board premiums on the other.
|
BULL SIDE |
|
BEAR SIDE |
| 1) |
Though cattle buyers will typically
start the week with perfunctory chores, they are nonetheless aware of a
bigger appetite for fed steers and heifer this week with the first full
slaughter week of January right around the corner.
|
1) |
For the week ended Dec. 25, net beef
export sales totaled 10,200 MT reported for 2018 were down 1% from the
previous week, but up 29% from the prior four-week average. At the same
time, actual weekly exports totaled 17,300 MT, down 5% from the previous
week, but up 2% from the prior four-week average.
|
| 2) |
The next major move in beef cutouts
will be higher in the next several weeks as retailers and food managers
restock cases and coolers in the wake of holiday clearance.
|
2) |
While the beef carcass value should
stage a seasonal recovery in the weeks ahead, the sizzle will be
somewhat cooled by the passing of holiday demand per se. More
specifically, the choice/select spread is expected to continue narrowing
into the new year, as choice middle meats come down at a faster pace
than the select product.
|
| 3) |
For the week ended Dec. 25, net pork
export sales totaled 31,600 metric tons (MT), up 42% from the previous
week and 63% from the prior four-week average. Increases were reported
for Mexico (19,900 MT), Hong Kong (4,200 MT), South Korea (3,600 MT),
Japan (1,100 MT), and Canada (1,100 MT).
|
3) |
For the week ended Dec. 25, actual
pork exports totaled 26,900 MT, down 3% from the previous week and 1%
from the prior four-week average. The primary destinations were Mexico
(10,000 MT), South Korea (4,200 MT), Japan (2,600 MT), China (2,200 MT)
and Colombia (2,000 MT).
|
| 4) |
China has detected the African swine
fever virus in some protein powders made using pork blood and
manufactured by a Tianjin-based company, the General Administration of
Customs said in a statement early last week.
|
4) |
Since the breeding herd was not
revised lower on the Dec. 1 Hogs & Pigs report for prior quarters,
it supports confidence in the level of sows and as long as producers
farrow the average of sows for this quarter (i.e., more than 48%), the
resultant pig crop and forward herd size going into 2019 will maintain
its record-large status.
|
CATTLE:(Forbes) -- "There's nothing blockchain
can do that a database software program can't do," says Sarah Taber, a
crop scientist based in Fayetteville, North Carolina, recalling a
conversation with a colleague about whether blockchain could be
agriculture's food safety holy grail. Taber, an outspoken critic of the
technology, says the industry should be looking within to solve food
safety problems first. "It's not the tool that's the problem," she
argues. "It's the people."
The food industry has experienced a number of
foodborne disease outbreaks this year, most notably in romaine lettuce
and ground beef. And on December 13, Adam Bros. Farming, a California
grower named by the FDA as a source of the most recent romaine outbreak,
issued yet another recall, albeit precautionary, this time of its
cauliflower and red and green leaf lettuce.
In the past year, the food industry has begun
looking to technology, specifically blockchain, as a solution to
foodborne disease outbreaks. Most notably, Walmart announced that in
2019, all of its leafy greens suppliers would be required to join its
blockchain in order to continue supplying to its stores.
Developed in 2008 as part of the cryptocurrency
bitcoin, blockchain works by recording the transactions of a consensus
of participating computer systems to the data chain. In the food
industry, blockchain tends to be of the "enterprise" or "private"
variety—that is, only a select group of participants are allowed to
upload and access the data on the chain.
Blockchain technology has garnered plenty of
food industry buzz this year, but Taber, who also hosts a podcast called
Farm To Taber about agriculture and technology, has become an outspoken
critic. As far as she's concerned, blockchain is a non-starter. "If you
have a company that doesn't hire quality people, then no tool you use
is going to work. Tracing a product like romaine lettuce should take a
company like Walmart a matter of hours, not days, Taber argues. There
should only be about a handful of middlemen to deal with, says Taber,
and those middlemen should be keeping good records. If it takes longer
than a few hours, says Taber, "that tells me your people are not using
the tools they already have."
Taber says she recently spoke with an avocado
distributor who, despite using an older computer system, can quickly
trace his product internationally within a few hours. "They're taking
avocados from Chile and Mexico and California," she says, "and washing
them and packing them and then distributing them to local facilities all
across the U.S. and Canada." Even though they're using not much more
than a "DOS-based software from the 80s," she says, they can track their
product within just two hours.
When it takes weeks, not hours, to trace
product, it's impossible to get to the source of an outbreak. That's why
it's so difficult for CDC and FDA investigators to find the source of
contamination. "By the time you get to the field where it happens," says
Taber, "whatever is dirty is gone."
Taber, who works as an auditor, primarily of
fruit and vegetable growers, says bad record keeping is a symptom of a
more insidious problem. "In agriculture," she says, there's kind of a
big fuzzy zone between bad record keeping and outright fraud." It's
impossible to know for sure what's really going on when nobody is
watching, she says, and even an auditor can only see so much.
Taber also worked for years as a farm worker
before becoming a crop scientist, and she believes the real reason we're
seeing more foodborne outbreaks these days is because of the increase
in immigration crackdowns. Farm workers, the people actually in the
field working the harvest, are in the best position to spot a food
safety problem and report it. But these days farm workers are living in
constant fear, if they're even working in the fields at all anymore.
"You really just want to keep your head down and
not make any noise," says Taber. "So if you're seeing a problem, you're
not going to say anything." The raids have created a "chilling effect"
throughout the agriculture industry, Taber argues, because workers are
increasingly terrified of speaking up about anything, let alone food
safety, which is a problem that's well beyond blockchain.
"It drives me crazy," says Taber, "because
they're clearly telling us 'we're dysfunctional' [but] what everybody's
hearing is 'oh, we need better tools.'"
Blockchain might offer a better way to record
and access data, but if the workers aren't reporting the problems and
the management isn't accurately recording the data, then it seems
blockchain doesn't have much to offer.
HOGS: (Dow Jones) -- McDonald's Corp. wants customers to eat more breakfast during breakfast.
When the fast-food giant three years ago
responded to widespread demand for breakfast beyond 10:30 a.m. by
offering McMuffins, hot cakes and sausage burritos all day, consumers
cheered -- and so did investors. McDonald's business got an immediate
jolt, and all-day breakfast buoyed sales for nearly a year.
But the availability of breakfast anytime led to
unintended consequences. More customers are forgoing morning visits and
getting their McMuffin fix in the afternoon and evening, according to
some franchisees. McDonald's has blamed slowing U.S. sales in recent
quarters on softness in its morning breakfast business.
McDonald's recently added new Triple Breakfast
Stacks, for a limited time, in an effort to generate excitement in a
menu that has seen little change. The sandwiches with extra meat are
offered beyond traditional breakfast hours only upon request.
The company is pushing the idea of a "holistic"
breakfast, with ads encouraging customers to pair its breakfast items
and McCafe coffee drinks, and it is testing baked goods including coffee
cakes and muffin tops. McDonald's has also started offering more
competitive breakfast deals, including breakfast sandwiches for $1.
Getting breakfast right is critical for a chain
that gets one-quarter of its sales in the morning. Rivals including
Chick-fil-A and Burger King have upped their breakfast game with new
products and deals.
They are all fighting for a shrinking market.
Restaurant traffic growth at breakfast has slowed in the past three
years as the entire eating-out market has softened, said David
Portalatin, a vice president at market-research firm NPD Group Inc.
Still, breakfast sales are more profitable than
lunch and dinner because ingredients such as eggs are cheap compared
with the beef and chicken in sandwiches served later in the day, and
fewer workers are generally needed to prepare breakfast items.
"What that means for us is that we need to
sharpen the focus on breakfast around products, convenience and value,"
said Linda VanGosen, president of menu innovation at McDonald's.
Whether the moves will be enough to compel more
people to stop in for breakfast is unclear. The chain is running up
against shifts in consumer behavior that could run counter to the idea
of the morning meal altogether. Levi Adams, a 21-year-old naval officer
in San Diego, loves McDonald's breakfast burritos and McGriddles but
doesn't have time to stop for breakfast on his way to work.
"When I was a teenager, I would get breakfast at
McDonald's, eat lunch at school and then have dinner at home with my
family," Mr. Adams said. "Now I wake up early every day, have coffee and
an apple at home and get McDonald's breakfast on my way home in the
evening. My eating habits have changed to fit my schedule." Numerous
McDonald's customers want burgers in the morning, according to thousands
of people who have tweeted about it. A spokeswoman for the burger giant
said demand isn't strong enough to warrant running the burger grill in
the morning. Offering a full menu all day adds complexity to restaurant
kitchens, and the additions of all-day breakfast and fresh rather than
frozen burgers in the afternoon have already slowed McDonald's service
speed. Seeing a long line at a drive-through window can be a deterrent
for consumers rushing to get to work in the morning. McDonald's Chief
Executive Steve Easterbrook in October said it is difficult to give
consumers what they want when they want it -- and at the speed they
expect.
