Posted on 12/23/2003 5:30:21 PM PST by sarcasm
CHICAGO (Reuters) - The first case of mad cow disease in the United States, revealed Tuesday, will likely have a devastating impact on U.S. cattle prices and could pummel the shares of companies like meat packer Tyson Foods Inc.and hamburger chain McDonald's Corp. (MCD.N), industry analysts said on Tuesday.
``It is a big deal. Consumers cut back on consumption and countries, for safety reasons, embargo beef from the affected country,'' said Joe Kropf, livestock analyst with Kansas City-based Kropf and Love Consulting.
U.S. Agriculture Secretary Ann Veneman confirmed a Holstein in Washington state has tested positive for mad cow, or bovine spongiform encephalopathy (BSE). Final tests will be done by a British laboratory and could take up to five days.
If confirmed the case could drastically reverse the fortunes of the U.S. cattle industry, which is having its most profitable year in history. Livestock analysts said the single U.S. case could drive cattle prices sharply lower for days at the Chicago Mercantile Exchange, where futures contracts establish prices for U.S. cattle.
For hamburger chains the concern is whether consumers will cut back on eating beef. A consumer backlash hurt McDonald's sales in both Europe and Japan after they reported mad cow cases in recent years.
In after-market trading, McDonald's shares fell as low as $24.20 from a close of $25.28 on the New York Stock Exchange. The stock later recovered to $24.34 on Instinet.
Other restaurant shares at risk include McDonald's rival Wendy's International Inc. (WEN.N) and steak chains such as Outback Steakhouse Inc. (OSI.N) and Lone Star Steakhouse & Saloon Inc. (STAR.0), analysts said.
Oak Brook, Illinois-based McDonald's, the largest fast-food company, said that it has no links to the meat plant that processed the sickened animal.
The United States exports about 10 percent of its beef, and the loss of any foreign markets would create a glut in U.S. meat supplies.
``I assume Japan will turn off our exports immediately, as will Korea, as will basically the rest of the world,'' said Jim Robb, director of the Denver-based Livestock Marketing Information Center.
Canada's beef industry was severely damaged earlier this year when imports of its beef were banned by the United States after a case of mad cow was discovered in Alberta.
Scientists suspect that humans eating some meat or other material from infected animals could contract a similar form of the disease, known as variant Creutzfeldt-Jakob disease (vCJD). The disease has killed about 130 people over the years, mostly in Europe.
``It's huge, huge,'' said Midwest Research analyst Christine McCracken, of the mad cow case. ``It's going to have a mixed impact on Smithfield and Tyson -- both of which are relatively large beef processors. But they have very large alternative protein businesses that are likely to benefit.''
Tyson Foods of Springdale, Arkansas is the nation's largest meat company with huge beef and pork operations, and Smithfield Foods Inc. (SFD.N) of Smithfield, Virginia is the nation's largest pork producer and fifth-largest beef producer.
Now, maybe I can afford a steak.
From today's news - The cold spell has killed more than 2,500 people across England and Wales in the past week, experts today revealed.
I'll take my chances with the beef...
They will be slaughtered.
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