Analysts see few sustained financial repercussions from 'pink slime,' BSE

By CAROL RYAN DUMAS

Capital Press

The negative impacts from the frenzy over lean finely textured beef, called "pink slime" by the media, and last month's discovery of BSE in a 10-year-old California cow are passing quickly, industry insiders say.

LFTB is not much of an issue after having a dramatic effect on packers at the height of the media frenzy. And the good news about the BSE impact that hit with USDA's April 24 announcement of the infected cow is it's about over, said Derrell Peel, Oklahoma State University extension livestock marketing specialist.

Demand for 50 percent lean beef trimmings, from which LFTB is produced, fell dramatically after criticism of the product went viral. Packers lost as much as $35 to $40 a head when the beef trim fell from $1 a pound to 50 cents a pound.

Trim prices haven't fully recovered, but were 89 cents this week and 88 cents last week, up from the bottom of 49 cents, said John Nalivka, owner of Sterling Marketing, a Vale, Ore., economic consulting firm for the red meat industry.

"Lean trim has made a pretty tremendous recovery. I, for one, thought it would take a lot longer than that to recover," he said.

Some of the initial decisions by retailers to not carry ground beef containing LFTB may have passed, and LFTB found its way into other markets, such as sausage-type meat products. There is also export potential for the product, Peel said.

"It's not too much of an issue," he said.

But media attention may return when processors, who choose to, label it on their ground beef products, he said.

The case of bovine spongiform encephalopathy, known as BSE or mad cow, hit the futures market hard the day the discovery was announced, with futures closing limit down $3 per hundredweight. Futures prices began recovering the next day as trading partners assured USDA that they would not change U.S. access to their countries, he said.

The announcement caused a sharp drop in live cattle futures but they recovered about half the loss the next day. Lower cattle prices now are not the result of BSE. Packers, who have been in the red since last fall, wanted to correct the market anyway, he said.

"They were looking for an excuse and found it," he said.

Cash markets were mostly unaffected by the BSE finding. The biggest impact was on live fed and feeder cattle.

"I don't anticipate any significant fallout from this point," Peel said.

"We had the LFTB debacle as well as BSE, but markets are showing a pretty strong foundation for beef demand," Nalivka said.

LFTB had some impact and put pressure on the trim market, he said.

"It was a real deal for two or three weeks," he said.

The greater and perhaps real impact is that an activist group with no scientific foundation for the statements that they made against LFTB led to the closure of three plants, which employed 650 people, he said.

"The markets have recovered, but I suspect there are still many lingering questions in peoples minds and we may not have seen the last of this kind of activity," he said.