Chicago - Cattle prices fell on rumors, confirmed after the markets closed, that a big meatpacker was recalling ground beef tainted by deadly E.coli bacteria.
At the Chicago Mercantile Exchange, live cattle for June delivery sold off sharply late in the day as the rumor about a new case of E.coli contamination flew through the market.
June futures, which earlier in the day set a three-month high at 69.30 cents a pound, dropped to 68.20 cents in the last 15 minutes of trading before closing at 68.40 cents, down 0.025 cent on the day.
After the market closed, Dakota City, Neb.-based IBP Inc., the nation's largest beef processor, confirmed that a package of ground beef produced on April 14 at one of its Illinois plants had tested positive for E.coli O157:H7, a deadly strain of bacteria.
The company said it voluntarily recalled a total of 280,129 pounds of the ground beef produced at the plant that day and distributed to about 50 food service and retail customers.
The U.S. Agriculture Department said health departments in some 20 states had been notified of the contamination but no reports of illness linked to the bad meat were known.
Analysts said the size of the recall was small compared with the record 25 million pounds of ground beef recalled by Hudson Foods Inc. from a Nebraska plant last summer.
Public education about proper cooking and handling following that scare might work to reduce possible negative effects on beef demand from the latest incident, some said. “I don't think it's going to have much impact. The public has seen all this before,” said Dan Vaught, livestock analyst with brokerage A.G. Edwards and Sons.
But Rich Tokheim, president of Investment Research Co., a commodity research firm, said he thought there should be at least some negative market impact in coming days.
“If the last few times have been an indication, it is going to hurt,” he said.
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