January 6, 2004

EU Grain and Livestock Markets Watchful For US Mad Cow

Europe's grain and livestock markets have taken in their stride news of a mad cow disease case in the United States, but traders remain watchful for any further incidences of the disease.

The announcement of the first reported U.S. case of mad cow disease on December 23 rocked agricultural markets in North America as traders weighed up the impact on animal feed demand and factored in the loss of beef export sales around the world.

"I do not see any huge impact on European grain markets unless BSE spreads much more in the U.S. and a big slaughtering programme is started," a German analyst said.

The European Union imports little U.S. beef because most is reared using hormones and little direct competition exists between the two suppliers on third markets.

"The indirect effect of opening new markets for EU beef is almost non-existent because we are not free from BSE ourselves," Yves Berger, director of France's livestock office Ofival, said.

French grain prices opened firmly on Monday, taking their cue from a strong close to U.S. wheat futures on Friday, which rallied sharply from mad cow-linked lows amid growing optimism that China was about to return as a major grain importer.

"The impact of the BSE crisis in the U.S. will be nil as the price decline has been more than offset by the Chinese news," Antonio Costato, CEO of Italy's biggest miller GMI, said.