By Dave Carpenter –
The beef futures market reacted calmly Monday to the second case of mad cow disease in the United States, but some investor concern surfaced with a 3 percent decline in the shares of Tyson Foods, the largest U.S. beef packer.
On the first day of regular trading since the Department of Agriculture reported the case Friday afternoon, August live cattle futures rose 0.70 cent on the Chicago Mercantile Exchange, to 80.57 cents.
Market analyst Rich Nelson said the muted reaction was partially the result of the market already having had two weeks to factor in the possibility of a mad-cow confirmation since a USDA announcement that the sample was being tested. The price had since declined more than 2 percent, he noted.
Export demand is not expected to be harmed significantly since the only country to immediately ban U.S. beef imports, Taiwan, is not a big importer.
Equally significant, consumer demand was unaffected after the first reported case in December 2003 so it is considered unlikely to take a hit this time.
”The U.S. consumer has not really shown any problem with demand with these things before,” said Nelson, director of Allendale Inc., a commodity advisory firm in McHenry. ”Consumers are not going to react until they see it hit home” — such as if a human were to fall ill after consuming beef products contaminated with the disease.
Tyson Foods’ stock closed down 56 cents to $17.44, evidently reflecting investors’ concern about the beef market.
McDonald’s, another stock that took an initial tumble when the first case was announced, edged down 12 cents to $28.16. Wendy’s International and Outback Steakhouse fell fractionally, while Applebee’s International moved higher.
Source: Chicago Sun-Times