California Dairy BSE Case Impacts Markets


Cattle market conditions today saw the LC and FC pit futures trade limit down on the news of the 4th case of BSE in the US. Overnight trading (Tues night) has already seen some recovery off of those pit lows earlier today. Markets will be closely watching the communication of this BSE case to US consumers and the world. Consumer demand and perceptions are critical to the end price of beef. Back in 2003, Canadian consumers were quick to understand that BSE was not a food safety issue and quickly supported the industry as borders closed to trade. Although the US is not as dependent upon beef exports as Canada was/is, they are expected to export 12% of their 2012 production. So along with ensuring the domestic consumer understands the beef supply is safe, so must export destinations (Japan, South Korea). Although beef supplies around the world are expected to decline in coming years, the demand for beef is just as important in determining the end price to producers. The days ahead will be imperative for the facts to remain at the forefront.


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