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Little market impact seen from Canada BSE case

Agriculture.com Staff 01/23/2006 @ 12:00pm

Because it hasn't prompted any border closings, the confirmation of another bovine spongiform encephalopathy (BSE) case in Canada on Monday had little impact on the U.S. cattle market, analysts said.

Following Canada's official announcement of its BSE case, USDA Secretary Mike Johanns said in a press release, there would be no change in the status of beef or live cattle imports to the U.S. from Canada under established agreements. "As I've said many times, our beef trade decisions follow internationally accepted guidelines that are based in science."

At mid-day on Monday, the Chicago Mercantile Exchange's Feb cattle futures price was up 2 points at $95.80 per hundredweight, April futures contract was unchanged at $94.12.

Barry Schmidt, Iowa Grain Company livestock market specialist, and on the Chicago Mercantile Exchange trading floor, said the first reaction to the news sent the markets a little higher, but it quickly became a non-event.

"Canada now has had four cases of BSE," Schmidt. "I hear that under the U.S. trade rules, Canada would have to have six cases before the border would be closed again."

On the floor, traders initially were thinking the Canada BSE announcement would be friendly to the market, Schmidt said. "Once everybody started looking into it and deciding what was going on it became neutral."

Meanwhile, Schmidt said open interest and large cattle placement figures are weighing on the market. "In our opinion, the market is going to decline in the next 3-6 months," Schmidt said.

On the cash side of the U.S. cattle market little reaction to the news is expected, according to Jeff Stolle, Nebraska Cattlemen vice-president of marketing.

"We have been through this before with an animal older than 30 months," Stolle said. That age is more susceptible to BSE. Plus, we know the parameters for which we are importing cattle and beef from Canada. None of that beef coming in is supposed to be over 30-months of age. So, I don't see this news having much effect at all."

With the exception of some auction barns, no cattle have been traded on the cash market this week in the central or southern Plains. Last week, cash cattle traded on average between $95.00 to $97.00 per hundredweight.

Meanwhile, Canada's beef and dairy cattle breeding industry remains shut out of U.S. markets since BSE was discovered in an Alberta cow in May 2003.

The U.S. reopened its border to young cattle last July after the two-year ban brought on by fear of mad cow disease.

Because it hasn't prompted any border closings, the confirmation of another bovine spongiform encephalopathy (BSE) case in Canada on Monday had little impact on the U.S. cattle market, analysts said.

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