Cattle Extend Rally as Mad Cow Fails to Slow Demand
Cattle futures rose for a second day on signs that the biggest buyers of U.S. beef will keep purchasing the meat, even after the country reported its first case of mad cow disease in six years. Hogs fell.
Importers reviewed meat-buying procedures after the U.S. said April 24 that a dairy cow in California was found with the brain-wasting disease. Canada, Mexico, Japan and South Korea, the four biggest buyers, said that they won’t halt purchases. Indonesia, which accounted for 0.6 percent of U.S. imports last year, said today it suspended acquisitions of U.S. beef shipped after April 24.
The response from top importers “certainly gives us some support for the short term,” Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “We’re not out of the woods.”
Cattle futures for June delivery climbed 0.1 percent to settle at $1.12375 a pound at 1:00 p.m. on the Chicago Mercantile Exchange. Prices advanced as much as 1 percent earlier. The price has dropped 7.5 percent this year.
After the U.S. Department of Agriculture disclosed that a cow was infected with mad cow disease, the nation’s fourth case and first since 2006, cattle futures slumped 2.6 percent on April 24 to a nine-month low. Prices rebounded 0.6 percent yesterday.
Risk of Bans
Indonesia’s decision “is a reminder that there’s a risk of more import bans to come if the situation in the U.S. worsens,” Carsten Fritsch, an analyst at Commerzbank AG, said by telephone from Frankfurt. “Prices seem to have stabilized, but if more cases of BSE emerge, then it’s possible other countries may follow.”
Indonesia doesn’t have a time frame for how long purchases will be banned, Agriculture Minister Suswono told reporters in Jakarta today. “We will continue to monitor the situation and seek information from the U.S. authorities,” said the minister, who uses only a single name. Canada, the biggest buyer in 2011, imported 32 times more beef from the U.S. than Indonesia did last year.
South Korea didn’t impose a ban because it saw “no problem” with the safety of the imported beef as the disease was found in a dairy cow more than 30-months old, Agricultural Minister Suh Kyu Yong told reporters today. The country will strengthen quarantine inspections of U.S. shipments, Suh said.
Hog futures for June settlement fell 0.2 percent to settle at 87.425 cents a pound on the CME. The price has gained 3.7 percent this year.
Feeder-cattle futures for August settlement dropped 0.4 percent to $1.5155 a pound in Chicago.
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