050644 Foods Shares Slide on Mad Cow NewsJune 27, 2005Chicago - The beef futures market reacted calmly to the second case of mad cow disease in the United States, but some investor concern surfaced with a 3 percent decline in the shares of Tyson Foods Inc., the largest U.S. beef packer. On the first day of regular trading since the Department of Agriculture reported the case Friday afternoon, August live cattle futures rose 0.70 cent a pound on the Chicago Mercantile Exchange, to 80.57 cents per pound. Market analyst Rich Nelson said the muted reaction was partially the result of the market already having had two weeks to factor in the possibility of a mad-cow confirmation since a USDA announcement that the sample was being tested. The price had since declined more than 2 percent, he noted. Export demand is not expected to be harmed significantly since the only country to immediately ban U.S. beef imports after the latest announcement, Taiwan, is not a big importer. Japan imposed a ban after the first U.S. case, and had faced increasing pressure from the United States to resume imports of American beef. Equally significant, consumer demand was unaffected after the first reported case in December 2003 so it is considered unlikely to take a hit this time. "The U.S. consumer has not really shown any problem with demand with these things before," said Nelson, director of Allendale Inc., a commodity advisory firm in McHenry, Ill. "Consumers are not going to react until they see it hit home" - such as if a human were to fall ill after consuming beef products contaminated with the disease. Scientists say humans can develop a brain-wasting illness, variant Creutzfeldt-Jakob disease, from consuming beef products contaminated with mad cow disease, or bovine spongiform encephalopathy. Shares of Springdale, Ark.-based Tyson Foods fell 56 cents to $17.44, evidently reflecting investors' concern about the beef market. The shares remained near the midway point of their 52-week trading range between $12.50 and $21.28. McDonald's Corp., another stock that took an initial tumble when the first case was announced, edged down 12 cents to $28.16. Among other fast-food chains and restaurant stocks, Jack in the Box Inc. closed down 1.7 percent, while Bob Evans Farms Inc. and drive-in burger chain Sonic Corp. declined about 1 percent each after posting gains on Friday. Wendy's International Inc. and Outback Steakhouse Inc. fell fractionally, while Applebee's International Inc. moved higher.
E-mail: sflanagan@sprintmail.com |
