DTN Early Word Opening Livestock

 
Cattle: Steady w/Wed Futures: 100-200 LR Live Equiv $159.79 - 0.59*
Hogs:   Steady-$1 HR Futures: mixed Lean Equiv $106.58 + $2.24**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Light to moderate trade volume surfaced in most cattle feeding areas on Wednesday as reluctant but nervous feedlot managers moved to accept yet another round of sharply lower bids. Most live sales were marked at $122-123, $8-9 lower. Again, it will be interesting to see official trade volume totals when Mandatory reports later this morning. Since lower sales tend to get reported at a slower pace than higher one, we suspect midweek movement was larger than many assume. Our guess is that asking prices on the balance of show lists will start out this morning around $125 live and $198 plus in the North. Live and feeder futures seem likely to open significantly lower, pressured by long liquidation and further signs of country panic.

Hog buyers are expected to resume work this morning with bids steady $1 higher. The appetite for live inventory may start to slow down a bit through the day and into Friday, especially given the fact that no packers seems to be planning a Saturday kill. Clearly, the work stoppage over the weekend says more about tightening market hog numbers than pork demand or the state of processing margins. Look for lean futures to begin with mixed prices. Needless to say, most buying interest will continue to be focused on spot July.

	BULL SIDE		BEAR SIDE
1)	The combination of rocketing wholesale pork prices and crashing beef cut-outs should eventually make the latter look more attractive to retailers and food managers.	1)	The inability of live cattle futures to hold a rally on Wednesday underscored the defensive psychology the market is mired in, a mindset that encourages beef producers to sell rallies.
2)	The forced liquidation of JBS's vast meat assets (as confusing as that picture currently is) threatens to throw at least a short term wrench in global meat production and trade.	2)	Beef cut-outs continued to struggle at midweek with lower wholesale prices an d box movement no better than "light to moderate."
3)	Early summer pork demand is on fire. For the second consecutive session, the cut-out surged more than $2 higher on Wednesday with all primals making significant contributions except the butt.	3)	For the week ending June 17, U.S. hatcheries set 224 million eggs in incubators, up 3 percent from a year ago. At the same time, chicks placed totaled 183 million, up 1 percent from 2016.
4)	For the week ending June 17, barrows and gilts averaged 277.5 pounds, 1.9 pounds lighter than the week before and 1.7 pounds smaller than 2016.	4)	Despite the fact that the national hog base dressed price was little better than steady on Wednesday, negotiated trade volume ballooned to more than 14,000 head. This could be a sign that we are close to a cash market top,

OTHER MARKET SENSITIVE NEWS

CATTLE: (Business Insider Inc.) -- McDonald's is taking one of the biggest risks in the company's history by adding fresh beef to its menu.

The fresh beef patties, which will be available at restaurants nationwide next year, have been slowing down customer service — something McDonald's has been struggling to speed up for years, Reuters reports.

The new patties take about one minute longer to prepare than the frozen patties that McDonald's has served for decades. That's because they are made to order, while McDonald's frozen patties are often made ahead of time and held in warming dishes until they are served.

Some customers are already complaining about longer waits at McDonald's restaurants that have started serving the fresh beef patties.

A customer in Dallas named Tracy Moore told Reuters that she's going to stop patronizing the fast-food chain, which she currently visits every day, if the wait time doesn't improve.

"If it's going to be that long every time, I won't order it. I'd go" elsewhere, she said, after ordering the new fresh-beef Quarter Pounder at a McDonald's drive thru and being told to pull into a parking spot to wait several minutes until it was ready.

McDonald's can't afford to alienate any more customers, especially at the valuable drive thru, where the chain gets about 70% of its sales.

The company told investors earlier this year that it has lost 500 million US orders to competitors over the past five years.

Improving service has been a primary goal of McDonald's CEO Steve Easterbrook over the last couple years. He has cut dozens of items from the fast-food chain's menu to try and simplify and speed up kitchen operations.

But McDonald's customer service still lags its competitors.

The chain ranked dead last among in terms of service for the third year in a row among all major fast-food chains in the American Customer Satisfaction Index's 2017 survey, which was released on Tuesday.

McDonald's got a customer satisfaction score of 69 out of 100 in the survey, compared to an average of 79 for all other fast-food chains. The survey was based on interviews with 5,557 customers.

McDonald's drive-thru wait time has also been slowing down in recent years. The average wait time at a McDonald's drive-thru was 208.16 seconds last year, according to QSR Magazine. That's about 25% slower than the average wait time 10 years ago.

But McDonald's — along with many analysts — are betting that any potential slowdowns in service will be offset by customers' affinity for fresh beef.

The patties have been described by McDonald's executives as juicier and more flavorful than its frozen patties. Many McDonald's franchisees have also been supportive of the initiative, saying it will improve the brand's perception.

And three Dallas-area McDonald's managers told Reuters that their sales of Quarter Pounders have soared 20% to 50% since adding fresh beef.

If those sales trends continue, then this risky bet on fresh beef could be well worth McDonald's — and its customers' — time.

(US News) -- Ranchers on Monday sued the U.S. Department of Agriculture, seeking to force meat to again be labeled if it's produced in other countries and imported to the United States.

The lawsuit, filed in federal court in Spokane, seeks to overturn a March 2016 decision by the Department of Agriculture to revoke regulations requiring imported meat products to be labeled with their country of origin. That change allowed imported meat to be sold as U.S. products, the lawsuit said.

"Consumers understandably want to know where their food comes from," said David Muraskin of Washington, D.C., an attorney for Public Justice, which filed the lawsuit. "With this suit, we're fighting policies that put multinational corporations ahead of domestic producers and shroud the origins of our food supply in secrecy."

Between 2009 and 2016, the USDA required country-of-origin labeling on meat.

The lawsuit said the change violated the nation's Meat Inspection Act, which required that slaughtered meat from other countries be clearly marked.

The Department of Agriculture on Monday declined to comment on a matter that is in litigation.

The lawsuit was brought by the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, the nation's largest group of independent cattle producers, and the Cattle Producers of Washington.

Bill Bullard of United Stockgrowers said the labeling is essential to allow Americans to support U.S. ranchers. "Empowering consumers to buy American beef with country of origin labels will strengthen America's economy," Bullard said.

Multinational corporations use the lack of clear labels "to import more beef from more foreign countries, including countries with questionable food safety practices," he said.

The lawsuit asks the court to vacate USDA's current regulations, which allow corporations that import beef and pork and other products into the United States to label that meat "Product of USA."

Beth Terrell, another attorney for Public Justice, which is a nonprofit legal group, noted that President Donald Trump initially expressed support for country-of-origin labeling, but he has since backed off. "Both consumer advocates and domestic producers were disheartened by President Trump's reversal," Terrell said.

More than 800 million pounds of foreign beef is imported into the United States each year, Public Justice said.

Without country-of-origin labeling, "domestic ranchers and farmers tend to receive lower prices for their meat because multinational companies can import meat and misleadingly present it as homegrown," Public Justice said in a news release.

HOGS: (Des Moines Register) — Company officials say construction delays are pushing back the opening of a $300 million pork plant in Sioux City.

The Sioux City Journal reports that the Seaboard Trump Foods plant was expected to begin production around July 31. But chief operating officer Mark Porter says more time's needed to get equipment in place and finish the commissioning process before commercial processing can get underway.

Porter says the new potential startup dates under consideration are Aug. 25 and Sept. 4.

The joint venture between Seaboard Foods and Triumph Foods will have the capacity to slaughter 21,000 hogs a day. The plant is expected to employ around 2,000 people by the time a second shift begins operation in May 2018.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

(BAS)

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