Bids and asking prices in feedlot country should
begin to take on some shape at midweek. Look for initial bids to start
out around $174 in the North and $111 in the South. Yet significant
trade volume may not develop until Thursday or Friday. Live and feeder
futures should open moderately higher as traders wait for a greater sign
of cash potential.
Look for hog buyers to resume work Wednesday
with bids steady to $2 lower. Saturday's kill is currently estimated at
192,000 head. Lean futures should open modestly higher in light volume.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Fed cattle prices are expected to increase going through the fall as supplies tighten on a seasonal basis.
|
1) |
Should open moderately higher
Friday's Cattle on Feed report was also a quarterly report, revealing
on-feed inventories by class. Heifers on-feed, reported at 4.3 million
head, were the largest since 2001, representing 38% of total cattle on
feed. Fourth quarter heifers on feed were up 11% from the year prior and
likely imply further aggressive heifer harvests through at least the
remainder of 2018.
|
| 2) |
The beef composite cutout is now
back above $206 for the first time since early September. Further
strength is anticipated into late October or early November.
|
2) |
The seasonal rise in cattle carcass
weights was more muted in 2017 than the season would have suggested,
leaving expectations for this year's weight increase to leave a rather
wide gap before finding peaks in late October to early November.
|
| 3) |
Cash hog markets are likely to
weaken at a stronger pace than the cutout, elevating packer margins
successively into the last portions of this fall and winter.
|
3) |
The pork carcass value closed moderately lower on Tuesday, pressured by softer demand for loins and bellies.
|
| 4) |
Hogs gaining weight is common this
time of year, but what will be critical to watch over the next few
weeks, is the weight gain while the additional packer capacity continues
to wake up. A second shift opened this week in Iowa, hitting about
one-third of its capacity, with the understanding and intent that it
will continue to ramp up over the next few months.
|
4) |
This week is likely going to find a
new single-day, hog-slaughter-high, with this week's harvest level on
par with last week to slightly higher. Hog harvests likely will exceed
2.5 million for the next few weeks and continue to push new record highs
into the fall and winter.
|
OTHER MARKET SENSITIVE NEWS
CATTLE:(Dow Jones) -- McDonald's Corp. is still
struggling to attract more U.S. customers but it eked out higher sales
this quarter by charging more for its food. The company has been trying
to revive traffic growth in the U.S. by upgrading restaurants, serving
burgers made with fresh rather than frozen beef and offering drinks for a
dollar. The chain also has been trying to make its food healthier by
removing preservatives from its burgers.
However, the 2.4% growth in same-store sales in
its home market, which was roughly in line with analysts' expectations,
was largely driven by higher-priced menu items.
Globally, the restaurant chain did better,
beating expectations for same-store sales growth, with a 4.2% increase,
resulting in its 13th consecutive quarter of positive same-store sales
growth globally.
"The strength in markets outside the U.S. is
encouraging when considering broader concerns about slower economic
growth," said Baird analyst David Tarantino.
Shares in McDonald's rose by more than 5% in
midday trading. The chain's U.S. franchisees, who own roughly 95% of the
country's more than 14,000 restaurants, say the only way to grow is to
attract more customers into the restaurants.
But rival fast-food chains have been offering
low-priced meals at breakfast, which have been stealing share from
McDonald's in the critical morning hours, which account for about 25% of
the chain's U.S. sales. McDonald's is not only competing for diners
with other restaurants but also with food purchased for at-home
consumption.
"It continues to be a battleground. It's a
market share fight on traffic, "McDonald's Chief Executive Steve
Easterbrook told investors on Tuesday. "We want to do better at
breakfast."
The company said it plans to introduce new breakfast items later this year and to offer more regional breakfast deals.
A group of some 400 franchisees met recently to
discuss forming an independent association to address concerns about
profitability. The franchisees say they are worried about not seeing a
return on their investment from efforts to remodel restaurants, which
the company is accelerating. McDonald's franchisees have been remodeling
restaurants throughout the U.S. to be more modern. Some stores have
been completely rebuilt while others have been upgraded with features
such as touch-screen order kiosks, mobile order pickup areas and digital
menu boards at the drive-through.
Mr. Easterbrook said the company is open to having discussions with its franchisees about what it can do better.
McDonald's said it expects to add 600 new
restaurants this year and to have about $2.5 billion in capital
expenditures for the year. Of that amount, $1.6 billion will be for the
U.S., up from the $1.5 billion it had forecast in July. The company also
said it expects to complete about 4,000 additional remodeling projects
in the U.S. this year resulting in half of the total U.S. restaurants
being upgraded by the end of the year.
Closures or disruptions due to construction have
resulted in lost sales for many restaurants, according to franchisees. A
report from research firm Gordon Haskett found that once restaurants
completed the upgrades, customer traffic increased considerably.
McDonald's Finance Chief Kevin Ozan acknowledged
that the pace of remodeling has been aggressive and that it represents
the largest construction project in the company's history. He said the
company is working to minimize the amount of time restaurants are closed
for remodeling.
McDonald's revenue fell 6.7% from the year-ago
quarter to $5.37 billion due to the sale of more company-owned
restaurants to franchisees. The figure beat analysts' estimates. The
company has spent the past few years moving its business model toward
one that is owned mostly by franchisees, which it said gives it a more
stable and predictable revenue stream.
The company's third-quarter profit fell 13% to
$1.64 billion. It said earnings were $2.10 a share, down from $2.32 a
share a year ago. Excluding the impact of a prior year gain and
restructuring and impairment charges, earnings per share increased 19%.
Earnings beat analyst expectations.
HOGS: (The Pig Site) -- The announcement of the
new voluntary inspection system for pork processing plants received both
criticism and praise from the pig industry. Now the USDA Food Safety
and Inspection Service (FSIS) will finalise the updated system in coming
months
The proposal, first put forward in February
2018, was to enforce new rules in processing facilities that would allow
hog slaughter plants to voluntarily join an inspection system which
would put plant employees in charge of determining which animals are
unfit for processing. Government inspectors who currently perform this
function would be moved to other areas of the plant focused more on food
safety.
The cap on processing line speeds would also be
removed, with packers responsible for maintaining animal welfare and
employee safety rules.
Currently, pork plants process an average of
between 950 and 1,000 hogs per hour; new line speeds could reach an
estimated 1,295 hogs per hour, according to test processing facilities
in operation since 1997.
This proposed change has been rejected by
processors, animal welfare bodies and some food safety groups: the risks
associated with increasing line speeds will quite possibly outweigh the
benefits. In July (2018), a report was published by The Bureau of
Investigative Journalism (TBIJ) indicating that even at current line
speeds, the dangers of working in a slaughter plant are high. On
average, two amputations a week are recorded across US processing
plants.
 |
| #chh |
No comments:
Post a Comment