U.S. Cattle Futures Drop after Animal Cruelty Video

CHICAGO (Reuters) - U.S. cattle futures slumped Wednesday [April 20] after an animal-welfare group released a grisly video depicting dairy calves on a Texas ranch being killed with a hammer and pickaxe.

The owner of the E6 Cattle LLC ranch described the incident as a one-time event involving four new employees who had since been fired, and said training and other action had been taken to prevent any recurrence.

Some traders in Chicago said they believed investors had sold cattle futures due to fears that the video might prompt consumers to avoid beef. Others said the impact on futures prices from such selling would have been exaggerated due to light volume ahead of a long, holiday weekend.

The release of the video followed an undercover investigation by Mercy for Animals, Nathan Runkle, executive director of the group, told Reuters. The group took the video and documents to the local district attorney's office.

Mr. Runkle and Kirt Espenson, owner of the ranch, located in the town of Hart, said no charges had been filed against it.

"We have been in full cooperation with the district attorney's office," Mr. Espenson said. "I take full responsibility for what happened. The employees in the video have all been fired."

Mr. Espenson said industry-approved animal-handling practices in place at the ranch had not been followed, and that all employees had since been updated on additional procedures.

U.S. cattle futures fell sharply after the group aired the video at news conferences in Texas and on its web site as investors worried its contents could turn consumers away from beef in the short term. To see the web site, go to: .

Animal-rights campaigners have long sought to draw attention to inhumane slaughter practices. Traders said the video appeared to spook investors relatively new to cattle futures, such as hedge funds that have flocked to livestockmarkets over the past year.

"You're not going to buy ... when that comes out," one Chicago Mercantile Exchange cattle trader said.

Many analysts doubted the video would have lasting impact, noting that previous undercover investigations showing similar abuse to animals had little effect on meatconsumption.

"You could make an argument that consumers could temporarily avoid beef," Rich Nelson, analyst at market advisory firm Allendale Inc., said.

Jim Brooks, floor manager for brokerage R.J. O'Brien, said other factors had hit livestock futures including liquidation ahead of the three-day weekend and selling before a cattle report from the U.S. Agriculture Department on Thursday [April 21]. He said light trading made it easy to push the market lower.

Cattle futures rose in early dealing on Wednesday, then dropped sharply after the release of the video. The actively traded June cattle futures contract fell as much as 2.025 cents to 115.15 cents per lb. Prices recovered somewhat in later trading and June closed down 0.675 cent at 116.5 cents per lb. June cattle futures were trading down further in morning trading on the Chicago Mercantile Exchange Thursday, at 116.250.