Cattle futures prices showed signs of stabilizing Tuesday as buyers emerged for the first time since the first case of deadly mad cow disease in the United States was revealed last week, traders said.
Fallout from the Dec. 23 announcement that a Holstein dairy cow had contracted the fatal disease has rocked the $27 billion U.S. cattle industry, the single largest sector of U.S. agriculture.
Chicago Mercantile Exchange live cattle futures had fallen more than 10 percent since the news on fears that U.S. consumers will turn away from beef. More than two dozen countries have already banned U.S. beef imports on food safety grounds, decimating the $3.3 billion beef export industry.
Normally, CME cattle contracts trade at a daily limit of 1.50 cents allowed under exchange rules. But since the mad cow news, the limit was expanded, to first 3.00 cents and then 5.00 cents, to free up trading.
Even with the expanded daily trading limit, it was the fourth trading session in a row that beef fell the maximum amount allowed in the wake of a case of U.S. mad-cow disease.
February live cattle fell 5 cents to 76.17 cents a pound; January feeder cattle fell 5 cents to 80.72 cents a pound.
Joe Kropf, analyst with Kropf and Love Consulting in Kansas City, Missouri, said the cattle market had gotten some good news after the U.S. Agriculture Department on Saturday said the infected cow had likely come from Canada.
“The source of the cow is Canadian and that means U.S. beef is still safe....The significance of that is it should shorten the time we get some export business going again,” Kropf said.
Japan, the largest market for U.S. beef exports, has refused to lift its ban on U.S. beef. But it will send a fact-finding team to the United States in early January.
“The U.S. will still have to take more steps to ensure the beef is safe,” Kropf said.
Beef packers in the U.S. Plains who have stood away from the market the past week and need supplies. On Tuesday, they were bidding for slaughter cattle at about $75 per 100 pounds, feedlot sources said.
That was down $3 from a few cattle sales in Kansas last Friday and down $17 from two weeks ago.
“If they trade today, I wouldn’t be surprised if they shipped them this afternoon,” said one Texas feedlot manager.
Packers typically have a week to ship purchased cattle to beef plants, but cattle can be shipped earlier if packer inventories are tight.
CME cattle traders on Monday were encouraged by signs that the U.S. consumer was sticking with beef despite the scare over mad cow disease, or bovine spongiform encephalopathy (BSE).
McDonald’s Corp., the No. 1 hamburger chain, reported Saturday that the scare had little effect on its sales. Burger King and Wendy’s International Inc., the No. 2 and 3 hamburger chains, issued similar statements on Monday.
A rare and deadly human form of BSE known as variant Creutzfeldt-Jakob Disease has been linked to the consumption of contaminated cattle products.
Livestock analysts said that despite the cautious revival of cattle trading on Tuesday, the search for the herd mates of the infected cow and possible detection of more cases of the deadly disease still hung over the markets.
“I think that is what everybody is holding their breath about right now,” said Bob Wilson, analyst at HedgersEdge.com. “I think the jury is still out. If we find another animal that has it, that would knock the market down more.”