Cattle Prices Fall Sharply Again
Cattle prices fell sharply Monday for a third consecutive trading session as fallout from the first U.S. case of “mad cow” disease continued to roil the $27-billion cattle industry.
At the Chicago Mercantile Exchange, cattle contracts for delivery in December through April all fell 5 cents per pound -- the expanded daily trading limit.
February cattle closed at 81.175 cents, down more than 10% since U.S. officials announced Dec. 23 the diagnosis of deadly “mad cow” disease in a 6 1/2-year-old Holstein dairy cow in Mabton, Wash.
Since last week’s news of the discovery of “mad cow” disease, or bovine spongiform encephalopathy, or BSE, U.S. officials have recalled 10,000 pounds of beef.
Meat from the infected cow and 19 others slaughtered Dec. 9 was shipped to eight states and Guam.
BSE’s human equivalent, variant Creutzfeldt-Jakob Disease, has been linked to consumption of BSE-tainted cattle products. The ailment, caused by misshaped proteins called prions, destroys neural tissue and has killed 137 people, mostly in Britain where BSE devastated the food industry in the 1980s.
The U.S. Department of Agriculture’s chief veterinarian said Monday that department investigators confirmed that the infected cow had been imported from Canada.
U.S. beef industry officials had called for nearly two dozen other countries to lift their bans on U.S. beef imports. But Japan, the largest market for U.S. beef exports, refused Monday.
The United States exports about 10% of the 27 billion pounds of beef it produces annually, and the concern is that the loss of export markets will divert beef into domestic channels, creating excess supply.
So far, U.S. domestic consumer demand for beef appeared to be holding up. Fast-food giants McDonald’s Corp., Burger King Corp. and Wendy’s International Inc. said hamburger sales were steady over the last week.
“I think the market is getting some good news. McDonald’s and Wendy’s said that sales over the weekend were not affected by ‘mad cow.’ There was some concern this would affect consumer demand for beef, and this alleviates that somewhat,” said Dan Vaught, livestock analyst with A.G. Edwards & Sons Inc.
The reports helped boost restaurant stocks, which took a hit the day after the “mad cow” case was first reported. McDonald’s gained 51 cents to $24.60 on the New York Stock Exchange. The world’s largest hamburger chain will benefit from lower beef prices and consumer demand will hold steady, said John W. Ivankoe, an analyst at J.P. Morgan Securities Inc. He raised his rating on the stock to “overweight” from “underweight.”
Wendy’s added 56 cents to $38.55 and Outback Steakhouse Inc. climbed $1.78 to $44.50, both on the NYSE.
Tyson Foods Inc., the world’s largest meat processor, rose 47 cents to $13.06 on the NYSE. Shares of Tyson had fallen 9.9% since Tuesday, after Japan and South Korea banned imports of U.S. beef.
On the downside, Smithfield Foods Inc., the world’s biggest hog producer, shed 85 cents to $21.06, and Hormel Foods Corp., the largest U.S. turkey processor, lost 58 cents to $25.57, both in NYSE trading.
David Nelson, an analyst at Credit Suisse First Boston, lowered his ratings on the stocks to “neutral” from “outperform.” Declining beef prices are depressing prices for other meats, Nelson wrote.
