June 29, 2004

 

 

Mad Cow Fears Hurt US Beef Prices

 

Cattle futures in Chicago plunged Monday, their biggest decline in six months, after a report Friday that the US may have detected its second case of mad cow disease.

 

Cattle for August delivery fell 2.925 cents, or 3.3 percent, to 86.425 cents a pound on the Chicago Mercantile Exchange, after earlier dropping by the exchange's 3-cent limit to 86.35 cents. It was the biggest one-day percentage decline since December 31.

 

The Department of Agriculture said Friday that an animal tested positive for bovine spongiform encephalopathy, or BSE, under an expanded screening program which had began on June 1. The department's National Veterinary Laboratory in Ames, Iowa, is conducting a more conclusive test on the carcass, and results are expected this week.

 

The USDA has said there may be as many as 30 or 40 false positives or inconclusive results since it announced the expansion of testing in May.

 

Authorities have not disclosed where or how they found this animal. Minnesota agriculture and animal-health officials said they had no indication that the animal was from this state.

 

Neverthelessl, an outbreak of mad cow disease would be felt through the entire $175 billion U.S. beef industry and beyond, analysts said.

 

Declining demand for beef would hurt processors such as Minnetonka-based Cargill Inc. and Arkansas-based Tyson Foods Inc., as well as farm equipment makers such as Deere & Co., feedmakers such as Archer Daniels Midland Co.

 

Beef prices that plunged in December after the confirmed mad cow case had recovered most of their losses during the past six months.

 

Cattle futures fell as low as 71.175 cents on December 31, eight days after the U.S. disclosed its first-ever case of mad cow disease in a Washington state dairy cow. Prices have since risen as much as 30 percent as domestic demand for beef surged on the popularity of high-protein, low-carbohydrate diets and an improving U.S. economy.

 

The human form of the brain-wasting disease, called variant Creutzfeldt-Jakob disease, probably is spread through consumption of processed food containing infected beef, such as brains and organs, scientists say.

 

More than 40 nations banned U.S. beef after the first confirmed case six months ago, all but halting exports valued at $3.8 billion last year.

 

Before the announcement, Japanese officials had signaled their intent to resume U.S. beef imports by the end of the year.

 

"I'm not worried about U.S. consumers turning away from beef as much as I am about the loss of export markets already open and the hope for reopening the Japanese market for U.S. beef," said Daniel Bluntzer, director of research for Frontier Risk Management in Corpus Christi, Texas.

 

Japan, the biggest export market for U.S. beef last year, stopped all imports December 23. Japan's vice agriculture minister, Mamoru Ishihara, says another possible positive test is not a surprise and may prolong Japan's ban on U.S. beef shipments.

 

Canada and Mexico, which eased their bans on U.S. beef imports since March, probably will not slow or halt purchases, U.S. Department of Agriculture Undersecretary J.B. Penn said Monday.