* Live cattle futures rebound
* Futures fell 3-cent limit Tuesday
* Japan, Mexico reassurance helps markets
By Theopolis Waters
CHICAGO, April 25 (Reuters) - U.S. live cattle futures rode back into the black on Wednesday after posting their biggest drop in seven months a day earlier when authorities confirmed the fourth case of mad cow disease in the United States in a dairy cow in California.
Futures tumbled the daily 3-cent trading limit Tuesday as this new case of the disease caused investors, especially money managers, to bail out of a market already battered by demand fears after the consumer uproar over “pink slime.”
Traders said assurances by Japan and Mexico that imports of U.S. beef would not be affected by the first case in six years of Bovine Spongiform Encephalopathy (BSE), popularly called mad cow, would support the market.
Still, prices hovered around their lowest in nine months.
South Korea said it would continue to allow U.S. beef imports, but two major retailers in the country halted sales of American beef after the mad cow in California was confirmed.
“After the mad cow fallout, the market became extremely oversold. And as assurances come in from USDA that this is an isolated incident and the meat did not enter the food chain, traders will start to forget about it,” said Joe Ocrant, president of Oak Investment Group Ocrant.
Benchmark June live cattle futures were up 0.350 cent at 111.925 cents per lb at 8:02 a.m. CDT (1302 GMT) Wednesday.
Futures have tumbled from a high above 131.000 cents in late February following an uproar over filler beef critics call “pink slime” that was treated with ammonia and used in ground beef for hamburgers. That dampened demand for such beef.
The first U.S. case of BSE was discovered in December 2003. After that, big importers as top buyer Japan banned American beef imports. U.S. beef exports plunged nearly 75 percent, with the USDA reporting net cancellations of beef sales in five of the first six weeks after that first case broke.
The countries eventually reopened to American beef after months of negotiations, but with tight restrictions on the age of the cattle.
Japan was considering relaxing its age restriction, which currently limits imports to beef from cattle up to 20 months old, as soon as this summer. Other countries restrict imports to beef from cattle up to 30 months old.
JBS USA, a unit of the world’s biggest beef producer, JBS SA, said the company was confident that U.S. beef exports would not be affected, and that the discovery would not set back Japan’s intention to relax rules on imports.
Dennis Smith, an analyst with Archer Financial, said, “We’ve gotten the response from overseas which is what people had hoped for. They’re not going to alter anything. Everything is okay.”
Smith said the California mad cow prompted a 400-point market plunge which could result in some initial margin call selling. Still, he expected the recovery would hold.