Meat Export Federation Says U.S. Beef `Very Safe'

April 25 (Bloomberg) — Joel Haggard, Asia-Pacific vice president of the U.S. Meat Export Federation, talks about the first U.S. case of mad cow disease in six years that was found in a dairy cow in central California. Haggard speaks from Taipei with Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

The first U.S. case of mad cow disease in six years may not disrupt the nation’s corn and soybean exports because global demand for crops used as livestock feed is surging, said Roy Huckabay, an executive vice president at Chicago agriculture broker Linn Group.

“Mad cow will have little impact on domestic feed demand,” Huckabay said. “Drought in South America is boosting demand for U.S. soybeans and soybean meal. China is buying U.S. corn, and that is the tip of an iceberg of new demand. China will buy 10 million metric tons of corn this calendar year, up from 5 million currently on the export books.”

A dairy cow at a rendering plant in California was identified by a routine test for the brain-wasting disease, known as bovine spongiform encephalopathy, the government said. Agriculture Secretary Tom Vilsack said in a statement that the animal didn’t enter the human food chain and there is “no reason to believe” other cattle are affected.

Corn and soybeans from the U.S., the world’s largest producer of both crops, are used mostly for feed, food and biofuels. Record global corn crops have failed to meet demand for three straight years, reducing stockpiles to the lowest since 2007, U.S. Department of Agriculture data show. Global inventories of soybeans will fall 20 percent before the next harvest, the biggest drop since 1996, the USDA estimates.

“The discovery of the disease means that the surveillance process is working, and that means very limited impact on corn or soybean demand,” Steve Nicholson, the chief economist for International Food Products Corp. in Fenton, Missouri, said in a telephone interview. “The global demand for food, especially from China, is not going to slow, even if the world economy continues to struggle.”

Temporary Losses

Before yesterday, there were three confirmed cases of BSE in the U.S., including a Canadian-born cow in 2003 in Washington State. Each time, corn and soybeans prices fell temporarily before regaining losses within several days, said William Tierney, the chief economist for AgResource Co. in Chicago.

Soybean futures for July delivery advanced 1.7 percent to $14.65 a bushel yesterday on the Chicago Board of Trade, after touching $14.7125, the highest since 2008. July corn futures fell 0.7 percent to $6.08 a bushel in Chicago.

U.S. corn inventories on March 1 slumped to the lowest for that time of year since 2004, the USDA said March 30. The agency’s estimate of consumption in the three months ended Feb. 29 unexpectedly rose 3.1 percent to a record 3.64 billion bushels. Reserves before the start of the harvest this year will fall to the lowest since 1996.

Cash Premium

July corn futures in Chicago traded at a 66.5-cent premium to December futures yesterday, a sign of tighter domestic inventories.

In Decatur, Illinois, a corn-processing hub that is headquarters to Archer Daniels Midland Co. (ADM), buyers paid an average premium of 27 cents a bushel above the Chicago futures price to take delivery of corn in April, the most in at least four years, data compiled by Bloomberg show. A year earlier, they were paying a premium of 3.6 cents.

“The strong cash basis and inverted futures markets are signs that corn supplies are extremely tight and demand has not slowed from exporters, livestock producers and ethanol producers,” Tierney said.

Tightening global supplies will drive prices in the next several months, he said. “China is buying both corn and soybeans.”

Corn will remain supported on speculation that China, the world’s biggest grower after the U.S., is increasing purchases to build state reserves, Linn Group’s Huckabay said.

U.S. exporters sold 480,000 metric tons of corn to unknown destinations, the USDA said yesterday. China may have purchased as much as 1 million tons last week to increase stockpiles, researcher said this week. The cost of importing U.S. corn on April 19 fell to the lowest this month, according to Shanghai JC Intelligence Co.

To contact the reporter on this story: Jeff Wilson in Chicago at

To contact the editor responsible for this story: Steve Stroth at

Source : May Cow Case May Pose No Threat to U.S. Feed-Crop Demand – Bloomberg