BSE news trigger mad markets, but sanity has returned

January 14, 2004
/ Print / Reprints /
/ Text Size+
News during the last week of the year, that USDA had discovered a case of bovine spongiform encephalopathy or BSE, a brain-wasting disease in a dairy cow in Washington state, sent agricultural markets into a tailspin.

Jerry Dryer
Marketing Analyst
Tel: (800) 243-7037

News during the last week of the year, that USDA had discovered a case of bovine spongiform encephalopathy or BSE, a brain-wasting disease in a dairy cow in Washington state, sent agricultural markets into a tailspin.

Commonly referred to as mad cow disease, BSE attacks the nervous system and brain of the animal and can be transmitted to humans if they consume these bovine body parts.

US markets responded as the news spread. Beef futures fell the daily limit for several days. Immediately after the BSE announcement, soy futures fell in anticipation of lower domestic utilization, but then climbed later in the same day.

What does this all mean for dairy? Take your finger off the panic button and consider the following:

  • Milk and dairy products are absolutely safe. The disease is not transmissible via milk and dairy products.
  • Virtually all beef is safe to consume.
  • Dozens of countries have stopped accepting beef shipments from the United States.
  • Domestic beef consumption will likely soften, at least short term. Some consumers will switch to pork, poultry, dairy products (especially cheese), fish and plant sources for their protein.
  • Beef prices took an immediate tumble, but from record high levels established last fall. Prices have since staged a modest recovery.
  • Once the dust settles, lower beef prices will probably prompt fast food operators to increase promotions for meal items such as cheeseburgers.
  • Lower cow prices may slow the number of cull cows moving to market, but not appreciably. By historic standards, prices are still fairly good. Beef prices just established new record highs in October.
  • It is income tax time and some producers and or their bankers will decide it is time to exit the milk production business regardless of cull cow prices.
  • Initially, soybean prices fell as traders assumed less demand for beef production. Prices then rebounded once reason prevailed and traders realized more soy protein will be needed to replace beef protein used in some animal feeds. Soybean prices, which were very high, are now well above the pre-BSE announcement levels.
  • Some feed manufacturers and mills will stop handling animal-based protein supplements (which may still be used in hog and poultry feeds) for fear of cross-contamination of cattle feeds also being processed.
  • Reduced usage of animal-based proteins is bullish news for soybean meal and other plant-based proteins. This also means higher feed prices for milk producers.
  • On the day of the BSE announcement, dairy futures plunged on the news, but settled above the lows established earlier in the day.

Bottomline: The BSE event is bullish news for milk prices

Did you enjoy this article? Click here to subscribe to Dairy Foods Magazine. 

Recent Articles by Jerry Dryer

You must login or register in order to post a comment.



Image Galleries

Anderson Erickson Dairy, Des Moines, Iowa

 From this one plant, AE Dairy manufactures a full range of Grade A dairy beverages and foods, including white and flavored milk, ice cream mix (packaged for retail sale and for commercial use), 50 flavors of Greek and conventional low-fat and nonfat yogurt, buttermilk, whipping cream, cottage cheese, juices, sour cream and dips.  


This photo gallery contains additional, unpublished photos of dairy processing facilities featured in Dairy Foods magazine. To view more Behind the Scenes galleries go to our archives page!

1/26/15 8:15 am EST

President's Address --2020 Vision

On Demand They say hindsight is 20/20, but IDFA President and CEO Connie Tipton is turning that old adage on its head. She plans to look forward to the next five years with a focused vision on important changes ahead for the dairy industry. In her address Tipton will challenge industry leaders to be willing to shake things up. She will unveil plans to ramp up IDFA activities during the run up to 2020.

Dairy Foods Magazine

dairy foods january 2015

2015 January

Our annual supplier spotlights issue; A look inside Anderson Erickson Dairy; plus our detection systems Q&A

Table Of Contents Subscribe

Dairy Foods in 2015

Which dairy food do you plan to eat more of in 2015?
View Results Poll Archive


Tharp & Young on Ice Cream: An Encyclopedic Guide to Ice Cream Science and Technology

An at once an all-inclusive guide to the meaning of hundreds of technical terms and ideas needed for ice cream manufacturing, as well as a practical introduction to the ingredients, freezing methods, flavoring, and packaging of ice cream, sherbet, sorbet, gelato, frozen yogurts, novelties and many other kinds of frozen desserts.

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications, Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.


Facebook logo 40px 2-12-13 Twitter logo 40px 2-12-13  YouTube logo 40px 2-12-13  LinkedIn logo 40px 2-12-13google plus

Dairy Foods Buyers Guide

cover df july 2013Resource for buyers in the dairy processing industry to find information on the leading suppliers and manufacturers.

Find Ingredients, Equipment, Distribution, R&D and More.

Start Your Search Today.