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BSE news to have little impact on U.S. cattle market, analysts say

Agriculture.com Staff 02/14/2016 @ 11:00am

Because of other negative fundamentals already in play, the U.S. cattle market will feel very little impact from the USDA's announcement of a confirmed BSE case, market analysts told Agriculture Online on Monday.

Jeff Stolle, Nebraska Cattlemen's vice-president of marketing, sees little market reaction. "This is an isolated case and it's much in line with what we have seen previously. It's an animal that is in excess of nine or 10 years old, and I just don't see it having much affect on the market," Stolle said.

The second U.S. BSE case comes on the heels of beef trade talks with Japan and South Korea. Because of its confidence in the safety of U.S. beef, the USDA doesn't see this positive case impacting trade talks. " We hope this doesn't hurt any trade, John Clifford, USDA Chief Veterinarian said. "We have a number of safeguards in place. We are being transparent with our information in coming forward with this announcement today. We see no impact with our ongoing discussions with Japan."

Because the U.S. has learned to live without the Japan and South Korea markets, the U.S. BSE news doesn't come as quite the shock to the cattle industry, Stolle said. "We've had no choice. We are where we are and we are a market trading without the vast majority of that Pacific Rim export trade."

Barry Schmidt, independent floor trader at the Chicago Board of Trade and member of the Chicago Mercantile Exchange, said the BSE news will be a non-event for the cattle market. "The market doesn't react to it a whole lot. If it does come into affect, we'll see the Japanese companies keep their ban on and South Korea," Schmidt said.

The large numbers of cattle placed in the feedyards since November 2005, plus a big 'placement' number expected for next month is weighing on the market more than anything, Schmidt said. In fact, he suggested the big feedyard numbers will weigh the prices down through August.

"We're still negative the market with April, May, and June futures prices feeling it. We look for the market to get down into the $70 per hundredweight this summer," Schmidt said. "Maybe even a six in front of the market."

On Monday, April live cattle futures finished up $0.17 at $83.62 per hundredweight, June ended up $0.02 at $79.12 per hundredweight. Also, cattle feeders traded higher.

Walt Hackney, Hackney Ag livestock analyst, agreed the $8.00 per hundredweight price drop in the last two weeks was due to the meatpackers cutting killing totals, lowering their need for feedlot cattle.

"Our whole (cattle) industry has become unphased by this BSE sensationalism. It would be a real surprise if the BSE news has additional impact on our markets," Hackney said.

Separately, USDA Secretary Mike Johanns said he had a positive meeting on Friday, regarding resuming beef trade with Shoichi Nakagawa, Japanese Minister of Agriculture, Forestry and Fisheries.

"Minister Nakagawa and I met for about one hour and had a good, candid discussion about our investigation into the ineligible shipment of U.S. beef to Japan, USDA's commitment to answer the questions being asked by the Japanese government and the mood within both of our countries regarding trade.

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