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Posted: 12/26/2003 8:32:24 AM EDT
Cattle Futures Fall by Limit as Japan Bans U.S. Beef Imports

Dec. 26 (Bloomberg) -- Cattle futures plunged the maximum allowed by the Chicago Mercantile Exchange after Japan banned U.S. beef imports and a U.K. laboratory confirmed a cow from Washington state tested positive for mad cow disease.

Japan, South Korea and Mexico, the biggest export markets for U.S. beef, have suspended imports since the U.S. announced the discovery of the sickened animal Tuesday. Prices on the Chicago exchange, which was closed for the Christmas holiday yesterday, fell the maximum amount Wednesday.

``We've got Asian countries shutting us off, and the lack of exports are going to kill us,'' said Brian Hoops, senior market analyst at Midwest Market Solutions in Yankton, South Dakota. ``We're going to drop down pretty hard.''

Cattle for February delivery fell 3 cents, or 3.4 percent, to 86.175 cents a pound at the 10:05 a.m. opening on the exchange. The daily price-change limit was increased to 3 cents from 1.5 cents, and will rise to 5 cents on Monday, the exchange said.

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 mad cow disease, known as bovine spongiform encephalopathy, was confirmed in Alberta. The price of feeder cattle also fell the 3-cent limit to 90.725 cents.

The U.S. was set to have a record year of beef exports at $3.6 billion, up from $3.2 billion in 2002, according to Gregg Doud, chief economist for the National Cattlemen's Beef Association. The U.S. Department of Agriculture 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.

Corn may also fall today after declining 3.3 percent on Wednesday. About 70 percent of the corn crop and a third of U.S. soybean supplies are used in animal feed.

Corn for March delivery fell 8 cents to $2.3575 a bushel at on the Chicago Board of Trade on Wednesday. Soybeans for March delivery rose 18 cents, or 2.4 percent, after falling as much as 1.8 percent to $7.65 a bushel.

Hoops said the discovery of mad cow disease in Washington may lead to less use of feed made from cattle bones, which may contain BSE, with farmers substituting more soybean meal-based feed instead.

Prices for soybean futures had risen by more than a third this year because of strong export demand and after a drought damaged crops in the Midwest. The futures reached a six-year high of $8.055 on Nov. 3.
Link Posted: 12/26/2003 8:36:53 AM EDT
6 month chart December live cattle

[url]http://quotes.ino.com/chart/?s=CME_LCZ3&v=d6&w=1&t=f&a=50[/url]
Link Posted: 12/26/2003 8:57:12 AM EDT
Originally Posted By raven:
6 month chart December live cattle

[url]http://quotes.ino.com/chart/?s=CME_LCZ3&v=d6&w=1&t=f&a=50[/url]
View Quote


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