Globe and Mail Update

Monday, December 29 – Online Edition, Posted at 5:08 PM EST

Live-cattle futures fell Monday as markets continue to react to the confirmed case of mad-cow disease in North America.

For the past two sessions on the Chicago Mercantile Exchange, futures contracts for live cattle and for feeder cattle have fallen by the maximum daily allowed of 3 cents (U.S.) a pound. As a result, trading shut down within minutes.

The trading limit has been increased Monday, allowing prices to drop by 5 cents a pound, more than triple the amount of the original collar.

In Chicago, cattle futures for February fell 5 cents to 81.175 cents from its last settle price of 86.175. Trading was quickly halted as the prices fell to its maximum amount, with no buyers present.

On Monday, Alberta Premier Ralph Klein spoke out on the mad-cow case, emphasizing there still has to be tests to confirm whether the single cow, from a farm in Washington State, was originally from Canada.

“Even if it turns out that it is from Alberta, there are many other questions that need to be answered,” Mr. Klein said at a press conference. He pointed out that it's not clear where it was infected or whether the cow was infected through feed.

“I ask all Albertan and Canadians ... not to jump to any conclusions,” otherwise it will be “harmful” to the industry, he said.

Beef-industry experts predicted that prices will likely drop by that maximum in both Monday's session and the next.

“From where we're at right now, they probably will decline early this week,” Gregg Doud, chief economist with the National Cattlemen's Beef Association, told the Globe and Mail.

Meanwhile, shares of some beef-related firms headed higher Monday after falling last week, with McDonald's rising 2.1 per cent and Tyson Foods rose 3.7 per cent, and Outback Steakhouse Inc. rose 4.2 per cent. J.P. Morgan upgraded its ratings of McDonald's Corp. to “overweight.”

“We believe mad cow will cause very slight consumer reaction beyond the immediate term -- assuming discovery of future cases is limited -- but that the downward pressure on beef prices will be immediate, erasing a previous investment negative for the restaurant industry in 2004,” J.P. Morgan analysts wrote in a report Monday.

Wendy's International Inc. said Monday that its same-store sales at its U.S. restaurants remained strong in December. The Dublin, Ohio, company said that following the mad-cow case, there has so far “no impact” on its sales in the past three days.

Wendy's shares rose 1.5 per cent.

The United States is accepting public input until Jan. 5 on a new rule that could allow animals under 30 months of age into the country, further easing a U.S. ban on all beef products and live cattle from Canada that was put in place after BSE was confirmed in an Alberta cow in May.

Over the weekend, the U.S. National Cattlemen's Beef Association called for an "indefinite extension" on that public-input period until the investigation is complete. DNA tests will reveal this week whether the Holstein with bovine spongiform encephalopathy was born in Alberta.

Canada's beef industry has lost $1.6-billion in exports since the first case of BSE was discovered in a Black Angus in May, although Washington allowed the sale of Canadian beef products to resume in September. Ottawa had been pushing for the ban to be further eased in the new year.

“Our government will continue to stand by the industry and do every thing we can to get the borders open and get the industry moving again at full speed,” Mr. Klein said.