April 25, 2012

US cattle tumbled for 11 months in Chicago while feeder-cattle prices fell by the exchange limit as a case of mad-cow disease was reported in the US Corn which is used in livestock feed.

A case of mad-cow disease has been found in a dairy cow in central California, John Clifford, the USDA's chief veterinarian, told reporters today in Washington. Its meat did not enter the food chain and the carcass will be destroyed, Clifford said. This is the fourth confirmed case of the brain- wasting disease in the US cattle herd since the first was discovered in December 2003 in an animal that came from Canada.

"It's all fear," Chad Henderson, a market analyst for Prime Agricultural Consultants Inc., said in a telephone interview from Brookfield, Wisconsin. "I don't know if it's going to affect beef demand much. The problem is the perception will run this market right now."

Cattle futures for June delivery fell by the exchange limit of 3 cents, or 2.6%, to settle at US$1.11575 a pound at 1 p.m. on the Chicago Mercantile Exchange. That's the lowest level since July 1 and the biggest percentage drop on a most-active contract since May 23.

Prices tumbled 21% in December 2003, when the US government confirmed a case of mad cow disease had been found. U.S. beef shipments of beef plunged 82% to 460.3 million pounds in 2004 as importers shunned the meat, government data show.

The commodity pared losses in electronic trading after the settlement. Futures fell 2.3% to US$1.1195 at 2:56 p.m. in Chicago.

"We've matured past the nervousness," Don Roose, the president of US Commodities Inc., said in a telephone interview. "We found our meat is controlled and safe. The meat did not enter the food consumption chain, and that's why the market this afternoon has bounced."

Feeder-cattle futures for August settlement declined by the 3-cent limit, or 1.9%, to close at US$1.51225 a pound on the CME. That's the biggest loss since September 22.

The BSE announcement "could also hurt the grain markets, with all livestock prices headed down," Henderson said. "It's just not going to be positive for corn or meal demand."

Corn futures dropped 0.7% to close at US$6.08 a bushel at 1:15 p.m. on the Chicago Board of Trade.