Proving the maxim that foreign trade is as much about politics as it is scientific fact, consumer demand or economics--U.S. beef exports just this month returned to the levels they were five years ago, before the discovery of a single Mad Cow Disease (BSE) case in the U.S.
Always eager to kick sand in the face of the big, bad United States of America, country after country banned U.S. beef, for the alleged BSE danger. This was naked, crass politics and gross hypocrisy at its worst. The domestic cattle herds of the main banners--Japan and South Korea--have had virtual epidemics of BSE, with over 20 cases each.
The truth is, the countries needed safe, wholesome U.S. beef to purify the domestic beef supply. In truth, each of the three U.S. BSE cases came in dairy cattle imported from Canada to the U.S.--not in the domestic beef cattle herd.
Once proven hypocrites and fools, the countries then claimed they couldn't sell U.S. beef because of public fears of the product. The massive success of selling U.S. beef in these countries, as this latest U.S. Department of Agriculture (USDA) data shows, overrides all the baloney their governments threw out.
It was the hard line Bush Administration demand that all trade with the U.S. was dependent on their acceptance of U.S. beef, that won the day.
To complete the ephemeral nature of the whole BSE scare, futures traders today at the Chicago Mercantile Exchange drove prices up in both live and feeder cattle contracts, based on the new USDA beef export data. The rise came not from free market count of actual existing cattle in the feedlot, or fewer numbers because of greater beef sales.
It came because traders saw an opporunity to gin up trading commissions and pounced on it. It had nothing to do with actual supply-and-demand economic data. That means, in order to keep trading commissions coming, an offsetting drop in beef futures prices is right around the corner. Cash cattle at the feedlots sold $2-$3 higher to meat packers, after the Merc trading day closed Friday.
Cattle owners should take notice, and not revel too long at their good fortune today. The day of reckoning is coming. Whatever goes up, must come down.
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