With the news that bovine spongiform encephalopathy was discovered in one cow in Canada, the ripples of the news could be felt throughout the entire meat industry.
The stock and beef commodity markets reacted negatively to Canada’s BSE news last week. Stocks of fast-food and meat-processing companies took a particularly hard hit. Most analysts believe those declines were and over-reaction and don’t expect a long-term impact. Some restaurant companies quickly released statements about the origin of the beef they serve.
Live- and feeder-cattle futures contracts took an initial hit but started rebounding. The big question is will there be spillover reaction from U.S. consumers? Timing is bad, with beef’s hottest season—summer grilling– just beginning. Some analysts believe that some consumers will select more pork and poultry.
As countries shut down Canadian imports, the U.S. beef industry could benefit. Again, some market analysts see a potential 10 percent increase in U.S. live-cattle prices. Canadian packers have already started cutting production and laying off workers.
Canada Pork International says the bovine spongiform encephalopathy investigation could potentially increase the domestic demand for pork but it will likely have minimal impact on export demand.
Canada Pork International Assistant Executive Director Martin Lavoie says results of that investigation will be the key factor in determining the potential spill-over impact on demand for competing meats in Canada.
Increased demand for pork in Canada could mean less Canadian pork coming to America. This could in turn mean increased demand for U.S. pork and higher prices. Still, there is no certainty Canadian pork will even benefit, much less benefit enough to reduce exports heading to the U.S.
Additional fallout from the BSE case, destine to impact the U.S. meat industry, involves country-of-origin labeling. The call for mandatory COOL has not only heated up, but has now become increasingly valid in more eyes.