Cattle futures plunged the exchange
limit in Chicago after Japan said it won’t lift a ban on U.S. beef
imports until it is satisfied the U.S. has put in place tighter
measures to ensure its meat is free of mad cow disease.
Futures fell the maximum allowed by the Chicago Mercantile
Exchange for the third straight session since the government
announced a cow in Washington state had tested positive for mad
cow disease. Some analysts had speculated the slide would bottom
out after U.S. officials said Saturday there was evidence that the
infected cow came from Canada. Shares of Tyson Foods Inc., the
world’s largest meat processor, and McDonald’s Corp. rose.
“This is an American agricultural tragedy,” said Chuck
Levitt, a livestock analyst at Alaron Trading Co. in Chicago.
Levitt said futures would continue to fall until all 74 animals
from the herd that the infected animal is believed to have entered
the U.S. with, as well as their calves, are traced. “That many
animals can be scattered to the winds,” he said.
Cattle for February delivery fell 5 cents, or 5.8 percent, to
81.175 cents a pound at the 10:05 a.m. Eastern opening on the
exchange yesterday. The daily price-change limit was increased to 5 cents
from 3 cents on Friday and from 1.5 cents earlier last week.
Shares of Tyson Foods rose 11 cents to $12.70 at 10:24 a.m.
in New York Stock Exchange composite trading yesterday. They had dropped 9.9
percent in the past two sessions. McDonald’s, the world’s biggest
hamburger-restaurant chain, rose 8 cents to $24.17. The stock had
dropped 4.7 percent in the past two sessions.
A U.S. trade team met with Japanese officials today in Tokyo
in an unsuccessful effort to get Japan, the biggest customer for
U.S. beef, to ease its ban on imports of the U.S. meat. The U.S.
embassy in Tokyo said those sales are worth $1.8 billion a year.
Japan has one of the strictest testing programs for mad cow
disease, or bovine spongiform encephalopathy, after the first of
nine infected animals was found in its herds two years ago.
More than 20 other nations, including Mexico and South Korea,
also suspended U.S. beef imports, dealing a blow to the U.S.
livestock industry, which expected to export a record $3.6 billion
of beef this year, according to Gregg Doud, chief economist for
the National Cattlemen’s Beef Association.
The USDA estimated total beef and veal exports for last year
at just under 2.5 billion pounds, or about 9 percent of total U.S.
production.
Before the U.S. case was discovered, futures had gained 25
percent since the U.S. banned Canadian cattle on May 20, after a
case of BSE was confirmed in Alberta, reducing supplies.
Bloomberg News
