Cattle Rise to Record as Japan’s Meat Demand May Gain Amid Nuclear Concern

Cattle futures surged to a record on bets that meat demand in Japan will increase amid concerns that farmland and animals were tainted after the March 11 earthquake and tsunami damaged nuclear units.

Retail-beef prices in the U.S. last month climbed to an all-time high. The nation’s cattle herd dwindled to the lowest since 1958, and meat exports have surged, spurred by a demand in emerging markets. Shrinking domestic supplies are increasing costs for supermarkets and restaurants.

Tyson Foods Inc. (TSN), the largest U.S. meat processor, said today that Japan may increase imports in the short term. Global food prices jumped 25 percent in 2010 and climbed to a record last month, according to a United Nations index. Surging costs contributed to uprisings in northern Africa and the Middle East that toppled leaders in Egypt and Tunisia.

“The Japanese people have an interest in buying U.S. beef,” said Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa. “There’s a concern with the contamination level. The U.S. and foreign products get a nod” over Japan’s products and production, he said.

Cattle futures for June delivery gained 1.675 cents, or 1.4 percent, to settle at $1.19575 a pound at 1 p.m. on the Chicago Mercantile Exchange. Earlier, the most-active contract rose to a record of $1.198. The price has climbed 28 percent in the past 12 months.

U.S. consumers may pay as much as 5.5 percent more for meat this year with prices rising faster than overall food costs, the USDA has forecast. Last week, wholesale beef climbed to the highest since at least January 2004.

‘Biggest Concern’

Beef is “probably the biggest concern” among commodity expenses for Wendy’s/Arby’s Group Inc., Chief Executive Roland C. Smith said this week. The cost of the meat may rise 15 percent or more this year, the company, the third-biggest U.S. hamburger chain, has forecast.

Japan was the largest importer of U.S. pork and the third- largest buyer of U.S. beef last year, government data show. In Japan’s northeast, hazardous radiation levels are delaying repair work at the Fukushima Dai-Ichi power plant, site of the worst nuclear disaster since Chernobyl.

Surging prices of corn, the main ingredient in livestock feed, have boosted costs for meat producers. In Texas, the leading U.S. cattle producer, the worst drought in 44 years is forcing ranchers to reduce herds.

“With the high price of beef, it’s getting real hard to move in the States, but export demand is really strong,” said Troy Vetterkind, the owner of Vetterkind Cattle Brokerage in Chicago. Japan has “been having to buy more beef, pork and chicken because of the problems they’ve got, so that’s been a pretty major factor,” he said.

Smithfield Outlook

More Japanese demand for chilled fresh pork over frozen products signals the country may have little meat available at the retail level, Smithfield Foods Inc. Chief Financial Officer Bo Manly said today at an industry conference.

Hog futures for June settlement fell 0.325 cent, or 0.3 percent, to $1.0315 a pound. Earlier, the price dropped 3 cents, the CME’s limit. Yesterday, the commodity reached $1.0415, the highest for a most-active contract since at least April 1986.

Feeder-cattle futures for August settlement rose 1.25 cents, or 0.9 percent, to $1.40575 a pound. Earlier, the price climbed to a record of $1.409.

To contact the reporters on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net; Tony C. Dreibus in London at tdreibus@bloomberg.net.

To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net

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Cattle Surge to Record

Ian Waldie/Bloomberg

Cattle futures surged to a record on bets that meat demand in Japan will increase amid concerns that farmland and animals were tainted after the March 11 earthquake and tsunami damaged nuclear units.

Cattle futures surged to a record on bets that meat demand in Japan will increase amid concerns that farmland and animals were tainted after the March 11 earthquake and tsunami damaged nuclear units. Photographer: Ian Waldie/Bloomberg