Global Agricultural Markets in Turmoil: Beef, Bird Flu, and Trade Concerns

Global markets for agricultural products were in a state of flux in March 2006 as concerns over mad-cow disease, bird flu, and trade restrictions created uncertainty for producers and consumers. A US technical team met with Japanese officials to discuss Japan's concerns over US beef safety, while the US Department of Agriculture announced that it would hold off on scaling down its enhanced mad-cow disease testing program until beef trade and safety issues were resolved with major foreign markets.

Meanwhile, the Chicago Mercantile Exchange planned to launch a range of energy products in June, targeting the market share of energy titans. Brazil's agribusiness sector was bracing for another port strike by federal animal health inspectors, while South Korea expressed discontent with the information provided by the US on the latest case of mad-cow disease. The European Union reference laboratory confirmed a buzzard found dead in Denmark was infected with the H5N1 strain of bird flu, leading to concerns about the spread of bird flu and postweaning multisystemic wasting syndrome.

Key Takeaways:

• A US technical team met with Japanese officials to discuss Japan's concerns over US beef safety, and the US Department of Agriculture announced that it would not scale back its enhanced mad-cow disease testing program until beef trade and safety issues were resolved.
• The Chicago Mercantile Exchange planned to launch a range of energy products in June, targeting the market share of energy titans.
• Brazil's agribusiness sector was bracing for another port strike by federal animal health inspectors, led by Wilson Roberto de Sa, president of the National Association of Federal Agriculture Monitoring Agents.
• South Korea expressed discontent with the information provided by the US on the latest case of mad-cow disease, and the US and South Korean governments stated that more information was required.
• The European Union reference laboratory confirmed a buzzard found dead in Denmark was infected with the H5N1 strain of bird flu, leading to concerns about the spread of bird flu and postweaning multisystemic wasting syndrome.
• US grain processors' shares were speculated to be impacted by the potential discovery of the deadly Asian H5N1 bird flu virus in the US, with equity research analysts stating that the market was difficult to speculate about.
• Texas' senators announced that they would press to reopen Japan to US beef imports, and second quarter US cash hog prices were forecast to be profitable for producers but below levels seen in the past two years.

Statistics:

• The US had a ten-week downtrend in Chicago Mercantile Exchange live and feeder cattle futures.
• Live cattle contracts had posted new lows, with traders calling opening prices Tuesday slightly lower.
• Chicago Mercantile Exchange lean hog futures were seen opening mostly weak on spillover selling, cash pessimism, and June's bearish premium to CME's hog index.
• Pork bellies were called flat to 30 points higher on short covering, speculative buying, and Monday's 14- to 16-pound fresh price rise to $82 from $80.
• The US Department of Agriculture reported a comprehensive report, including color photos of the infected cow, sent to Seoul.

Sources:

• Dow Jones Commodities News via Comtex
• Dow Jones
• AP