Mad Cow News Unlikely to Affect July 4 Beef Sales

Hamburgers and steaks are expected to remain on Fourth of July shopping lists despite news Friday of a second U.S. case of mad cow disease (search), analysts and economists said.

"I am not looking for a major reaction to this thing on the consumer side," said Derrel Peel, agricultural economist at Oklahoma State University (search).

The latest mad cow case comes a week before one of largest cookout holidays of the year and if it causes a shift in consumer buying it could be evident this weekend as consumers start holiday purchases.

"The only near term problem would be the Fourth of July, because this will be fresh on consumers' minds," said Rich Nelson, livestock analyst with Allendale Inc., McHenry, Illinois.

While there may be a mild shift to pork and chicken for holiday meals, analysts and economists said much of that shift could be price driven rather than in reaction to mad cow.

The latest case was a beef cow at least eight years of age and was slaughtered at a pet food plant. The beef never entered the food supply, Agricultural Department officials said.

Mad cow disease, formally known as bovine spongiform encephalopathy (search) (BSE), is a fatal brain disease and is spread through tainted feed. The concern is that scientists believe humans can contract a similar fatal brain disease by eating infected meat from a diseased animal.

"The BSE threat to humans in this country is so remote that there's a better chance you'll get hurt crossing the street to get to the grocery store than by the beef you buy in the grocery store," Agriculture Secretary Mike Johanns said Friday.

Cattle futures at the Chicago Mercantile Exchange (search) are expected to open sharply lower Monday and could move lower again Tuesday due to Friday's announcement. But after that analysts said prices could stabilize.

"We are calling futures 1.00 to 3.00 cents lower at the opening on Monday. We will probably be down all day Monday and maybe open lower Tuesday. After that it is anybody's guess," said Allendale's Nelson.

Cattle prices fell sharply after the first mad cow case in December 2003 because beef exports came to a halt. However, since the largest export markets for U.S. beef are still closed, near term price action may depend on how U.S. consumers react to the latest case, analysts said.

"Everybody is going to be watching very closely this weekend to see what type of play this gets in the popular press," said Ron Plain, University of Missouri agricultural economist. "I am not expecting much consumer reaction to this."

Shares of popular steakhouses also are seen surviving the mad cow case.

"As it relates to restaurant stocks, we believe the risk is mostly headline-based as demand for beef could be unaffected," Lawrence Miller, a Prudential Financial analyst, wrote in a research report. "We note that sell-offs in the stocks from prior mad cow related events have ended up being good buying opportunities."