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U.S. cattle market shows little immediate worry of Japan border closure

Agriculture.com Staff 01/20/2006 @ 1:26pm

If there was nervousness in the U.S. cattle market on Friday from Japan closing its border to U.S. bee f, one had to look harder than first thought, but that doesn't mean traders don't have at least one eye constantly watching the U.S. response, one market analyst said.

After finding a shipment of material considered at risk for mad cow disease, Japan officials announced they were closing their border to U.S. beef imports.

A team of USDA inspectors has been dispatched to Japan to work with Japanese inspectors to reexamine every shipment currently awaiting approval, to confirm compliance with the requirements of the U.S. export agreement with Japan, according to a USDA press release.

On Friday, the CME's Feb futures contract settled 35 points lower at 95.77 cents a pound, while April ended down 52 points at 94.12 cents.

John Harrington, DTN livestock analyst, told Agriculture Online on Friday after the markets closed, the Chicago Mercantile Exchange (CME) cattle futures closed lower showing a little bit of nervousness.

"There was a little bit of who needs Japan anyway attitude," Harrington said. "Plus, we have lived without Japan for two years. The market is concerned, but not paying too much attention yet. The Feb contract finished about $1 below cash trades today, so there was a little worry," Harrington said. But cash prices were still $3.00 per hundredweight higher than last week."

Because of a current supply-driven cattle market, the Japan news carried a lighter impact, Harrington said.

"We have tight feedlot supplies. I see them remaining tight for another 30-60 days. Now, come April, we are going to have a world of cattle to work through and we will need Japan or somebody with a big beef appetite."

With such a large number of cattle being placed in feedlots ahead of schedule, the current U.S. weekly cattle slaughter average of 600,000 head is going to need to be about 700,000 head per week in May, Harrington said.

If there was nervousness in the U.S. cattle market on Friday from Japan closing its border to U.S. bee f, one had to look harder than first thought, but that doesn't mean traders don't have at least one eye constantly watching the U.S. response, one market analyst said.

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