Industry Awaits BSE Findings, Markets React

June 14, 2005 — The complex realities of the U.S. beef industry are settling in today as cattle industry members nationwide contemplate the potential outcome of the U.S. Department of Agriculture (USDA) announcement late last week that a suspected case of bovine spongiform encephalopathy (BSE) once thought to be negative has indeed resurfaced.

Secretary of Agriculture Mike Johanns announced June 10 that samples from an aged downer animal first identified November 2004, which tested negative for BSE last year using an immunohistochemistry (IHC) test, have returned a “weak positive” result using a different internationally recognized test, the Western blot. (See Inconclusive BSE Case Tests Positive Using Western Blot.)

The decision to retest the sample came earlier last week as the USDA Inspector General recommended retesting samples from three animals found inconclusive using rapid tests implemented since the government agency began its expanded surveillance program a year ago. The other two samples retested negative, but the positive reaction of the November animal has sent shock waves through the domestic cattle industry — shock waves that are also rippling through markets.

According to a Bloomberg article released yesterday, cattle prices in Chicago fell to the lowest in 14 months due to concern surrounding test results. Cattle futures for August delivery dropped 1.65¢, or 2%, to 80.475¢ per pound (lb.) on the Chicago Mercantile Exchange (CME) after reaching 80.325¢, the lowest since April 30, 2004, Bloomberg reported. However, shares for Tyson Foods Inc. — the United States’ largest meat processor — closed higher yesterday, gaining 15¢ in New York Stock Exchange composite trading.

The market is expected to give a more definitive response when confirmatory testing being conducted by USDA officials and scientists at a reference laboratory in Weybridge, England, is completed. However, that could take approximately two weeks or more to complete, USA Today reported.

While the industry awaits results, some members of Congress are asking why the testing is being done now, seven months after initial results were released. According to yesterday’s The Associated Press article, Rep. Rosa DeLauro (D-Conn.) and Sen. Tom Harkin (D-Iowa) have stated they will ask USDA to explain why the tests were ordered. A statement by the USDA Office of the Inspector General regarding testing recommendations is expected sometime today, the article noted.

Johanns said Friday that confirmatory findings shouldn’t have any effect on international trade relations since the suspected animal was aged, but reactions from South Korea demonstrate otherwise. Although the animal did not enter the feed or human food chain and, therefore, presents no human health risk, a South Korean newspaper, The Chosun Ilbo, reported an Agricultural Ministry official as saying a final confirmation would affect the country’s decision whether or not to restart imports of U.S. beef.

Reaction from Japan was more encouraging. According to Dow Jones Newswire, a senior Japanese agriculture official said the government is considering resuming U.S. beef imports with “the assumption that there is a risk” of finding more BSE-infected animals.

For more information visit www.usda.gov.


— by Crystal Albers, Angus Productions Inc. assistant editor

© Copyright 2005 Angus Productions Inc.

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