Cattle buyers could start making more noise Thursday, perhaps not in terms of higher bids but in more efforts close to steady with last week. Look for $126 bids to be renewed on a live basis, $203 to $204 dressed. Most showlists will be priced around $128 in the South and $205 plus in the North. Live and feeder futures should open narrowly mixed as traders wait for more clues regarding cash potential.
Look for the cash hog market to open with steady/weak bids. While still acceptable, processing margins are tightening as carcass value falls at a faster pace than the cheapening cost of live inventory. The Saturday kill should be close to 115,000 head. Lean futures are staged to open significantly lower, pressured by technical selling and wholesale pork prices coming unglued.
| BULL SIDE | BEAR SIDE | ||
| 1) | The willingness of cattle buyers to bid fully steady with last week (i.e., $126) is nothing to sneeze at. Offers to spend $3 over spot April is not exactly shy and suggests that ready numbers are relatively tight. | 1) | Live cattle futures remain below recent feedlot sales. Unless the basis can weaken in some way, feedlot managers will find it very difficult to force packer bids higher. |
| 2) | The structure of the live cattle futures market should be encouraging producers to aggressively market cattle in the coming months. Pulling cattle forward hard enough and long enough will eventually lead to a marketing hole. | 2) | For the week ending March 3, U.S. Hatcheries set 227 million eggs, up 2% from a year ago. At the same time, broiler growers placed 181 million chicks, up 1% from 2017. |
| 3) | Lean hog futures have gone from oversold to extremely oversold. Both specs and commercials should be running out of selling interest. | 3) | For the week ending March 3, Iowa barrows and gilts averaged 286.4 pounds, up .6 lbs. and 5.4 lbs. more than 2017. |
| 4) | The premium built into the June contract reflects a normal seasonal increase in cash prices over the next two months. | 4) | The pork carcass value crashed and burned more than $3 on Wednesday, hammered in large part by a $10 plus loss in the belly primal. |
CATTLE: (USA THURSDAY) -- The Caliburger chain can't keep burger flippers employed -- they quit too often, it says.
So the plan is to try something new: A robot that has been programmed to flip hamburgers all day long. Named Flippy, the $100,000 machine is capable of flipping as many as 2,000 burgers a day.
As of Monday, a human at Caliburger's restaurant here is making the burger patties, seasoning them and placing them in a tray for the robot. Flippy pulls them out, places them on the griddle, monitors their temperature, flips them and takes them off the griddle to cool. They then get placed by a human into buns for customers.
"People see a robot, they hear robot, they assume job replacement," says David Zito, the CEO of Miso Robotics, which created Flippy with the Cali Group, the owner of the Pasadena-based Caliburger chain. "This isn't about replacing jobs. This is about a third hand in the kitchen."
Whether its burgers, cars or farming, robots are becoming capable of doing jobs that were once staples of employment. In late 2017, a study by the Pew Research Center showed three-quarters of Americans said it is at least "somewhat realistic" that robots and computers will eventually perform most of the jobs currently done by people, and the survey found respondents worried about the fallout, such as income inequality.
Tests by restaurants using robots have been mostly viewed as a public relations stunt. In the San Francisco Bay Area, the Zume Pizza chain uses a pizza-making robot to cook the pies while Sally the robot, also in the San Francisco area, makes your salad.
If the robots do take off, they raise the prospect of sapping -- or at least shaking up -- one of the high-growth areas of U.S. employment. Between 2007 and 2017, restaurant jobs that focus on fast food rose 40% to 4.9 million, according to the Bureau of Labor Statistics. That's faster than health care, construction or manufacturing.
Fast-food workers have been pushing for higher wages -- and some big chains, facing high turnover and voter mandates, have complied.
But not all. Many workers are still fighting to get $15-an-hour wages.
"People who work in fast food aren't scared of robots -- what's really scary is getting paid so little we need food stamps and public assistance to take care of our families," says Rosalyn King, a McDonald's worker from Detroit who is active in the union-backed Fight for $15 movement.
For the Caliburger chain, which advertises $3.99 "Southern California style" hamburgers, keeping employees in the kitchen is the most difficult aspect.
"We train them, they work on the grill, they realize it's not fun ... and so they leave and drive Ubers," says John Miller, the CEO of the Cali Group.
Miller hopes the robot can turn that around. From Pasadena, he's looking to bring Flippy to his restaurants in Seattle, Washington, D.C., Baltimore and Annapolis this year. He has 50 stores in his chain and says he will eventually get the robot to all of them.
Some 54% of all tasks associated with fast-food restaurants are poised to be automated, says McKinsey Global Institute.
At a test run recently of Flippy for the news media, the robot flipped with ease. But when it took the burgers off the griddle to cool on the tray, several didn't make it all the way and fell off the tray. Zito says those were learning pains that would be fixed.
The robots gets direction from thermal imaging and camera vision to get direction on when to flip the burger and eventually remove it.
Flippy will most certainly take jobs away, says Julie Carpenter, a research fellow with the Ethics and Emerging Sciences Group at California Polytechnic State University at San Luis Obispo, Calif. But she doesn't see fast food going 100% robotic. Restaurants will still need cashiers, people to open and close up, and for other tasks.
As for reception from the public, "people might think it's cool, or angry that machines are taking over," she predicts.
Christian Warren, who owns the Melody Bar & Grill in Westchester, Calif., is skeptical his clientele would go for a robot burger flipper. "Many of my customers have specific needs ... they want a burger well done or medium," he says.
For now, Flippy can make burgers only one way, but that will be adapted in the future to cook menu items to order, its maker says.
Another issue is the price tag. The robot costs from $60,000 to $100,000 for the Flippy that also cleans the oven. Warren says it would take him "years" to recoup the $100,000 cost of the robot. "Eventually, you'll save on labor, but it will take a long time to get there."
Meanwhile, how does a robot burger taste? This reporter tried one of the robot cheeseburgers, and it tasted just like a human-made one. It was well-cooked, and it's doubtful anyone would really be able to tell the difference.
The only beef: The burger was a little salty, but you can't exactly complain to the chef, now can you?
HOGS: (National Hog Farmer) -- When complete 2017 trade data are available, global pork exports will likely be about 2% lower than the record volume achieved in 2016 -- which was driven in part by soaring demand from China. Exports from the world's six leading suppliers (the European Union, the United States,
Canada, Brazil, Chile and Mexico) totaled 8.065 million metric tons, falling 2% year-over-year after a remarkable 18% increase in 2016. Export value set a new record in 2017 of about $20.23 billion, up 5% year-over-year. For the world's top six exporters, export value has more than doubled since 2006.
China's imports cooled last year (down 17%), but still reached the second-highest volume on record at 2.45 million mt (up 58% compared to 2015). Global demand for pork remained impressive as growth in other import markets -- both established and emerging -- helped offset the decline in China.
The United States led global pork export growth with a 6% increase to 2.45 million mt, while export value climbed 9% to $6.49 billion. For a full summary of the 2017 export results for U.S. pork, see this U.S. Meat Export Federation news release.
EU pork exports had a strong finish to 2017, but ended the year at 3.5 million mt -- down 8% from its 2016 record. Export value, however, held steady at $8.46 billion. EU exports slowed to China/Hong Kong (1.8 million mt, down 18%) but increased to the rest of the world (1.71 million mt, up 6%). This included growth to Japan (378,360 mt, up 7%), South Korea (267,396 mt, up 5%), the Philippines (198,409 mt, up 13%), the United States (142,092 mt, up 30%), Taiwan (58,799 mt, up 28%), Ivory Coast (49,913 mt, up 21%), South Africa (32,381 mt, up 15%), Serbia (31,203 mt, up 22%) and Congo (29,259 mt, up 30%).
For muscle cuts only, EU exports were down 9% in 2017 to 2.2 million mt, as a sharp decline to China/Hong Kong (863,070 mt, down 23%) was not fully offset by an increase to the rest of the world (1.33 million mt, up 5%). EU hog prices have been slightly higher than in the United States in 2018 and this was also the case for most of 2017 -- but the spread between EU and U.S. export prices remains quite narrow.
Canada's 2017 exports set another new volume record at 1.19 million mt, 3% above the previous high set in 2016. Export value was $2.98 billion, up 7% year-over-year, but below the 2014 record of $3.24 billion. Canada's pork export growth was driven by Japan (227,994 mt, up 16%), Mexico (103,840 mt, up 2%), the Philippines (41,058 mt, up 46%), Taiwan (39,666 mt, up 93%), Chile (12,523 mt, up 16%) and New Zealand (10,357 mt, up 18%). This offset a slowdown to Canada's top two markets: the United States (347,713 mt, down 7%) and China (303,367 mt, down 2%).
For muscle cuts only, Canada's 2017 exports were up only slightly year-over-year to 1.02 million mt as decreases to China/Hong Kong, the United States, Mexico, Korea and Australia were only narrowly offset by growth to Japan, Taiwan, the Philippines, Chile and New Zealand.
Canada's hog slaughter totaled 20.73 million head in 2017, up 2% year-over-year and the largest since 2009. The combined total of Canadian slaughter plus live hogs shipped to the United States increased 1% year-over-year, as U.S. imports of Canadian hogs fell 1% to 5.6 million head. So, while Canada's pork industry is in expansion mode, it hasn't seen the record-breaking production under way in the United States.
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