MAD COW NEWS

Chicago Mercantile Exchange Accelerates Expanded Daily Price Limit Schedule
in Cattle Contracts

CHICAGO, Dec. 24, 2003 – The Business Conduct Committee of Chicago
Mercantile Exchange Inc. (CME) met this morning at 11:00 a.m. Central time to
consider whether an emergency action was required to respond to market activity
following the announcement of the discovery of Bovine Spongiform Encephalopathy
(“Mad Cow Disease”) in one Holstein dairy cow near Mabton, Washington. Holstein
cattle are not deliverable on CME’s cattle contracts.

After full consideration of the impact on the cash and futures markets, the
committee unanimously voted to accelerate CME’s schedule for expanded daily price
limits in its live cattle and feeder cattle futures contracts. For the live cattle futures
contract, on Friday, Dec. 26, the daily price limit will be $0.03 per pound. If the
December 2003 or February 2004 contract month is locked either up or down the limit at the close on Friday, then the limit on Monday, Dec. 29, and on Tuesday, Dec. 30 will be expanded to $0.05 per pound. If either contract month is locked limit at the close of trading on Tuesday, Dec. 30, the limit on Wednesday Dec. 31 will continue to be $0.05 per pound. Otherwise it will revert to $0.03 per pound. The same accelerated schedule will be in effect for feeder cattle futures.

Trading hours for both contracts on Friday, Dec. 26, will be the planned holiday
hours of 9:05 a.m. to 12:00 noon Central time, the same hours that traded today. At
today’s open, trading in live cattle and feeder cattle futures opened down the $0.015 per pound daily limit and remained down the limit for the rest of the trading day.
CME’s daily price limit schedule was revised on Oct. 15, 2003. The schedule
that applied prior to today’s emergency action was as follows:

• If either of the two contracts in the even month cycle nearest to expiration settles
on the limit bid for two successive days or on the limit offer for two successive
days, the price limit shall be raised to $0.030 per pound for all contract months.
• If the daily price limit is $0.030 and either of the two contracts in the even month
cycle nearest to expiration settles on the limit bid for two successive days or on
the limit offer for two successive days, then the price limit shall be raised to
$0.050 per pound for all contract months.
PAGE 2
• If the daily price limit is $0.050 and neither of the two contracts in the even month
cycle nearest to expiration settles on the limit bid or limit offer, without regard to
market direction, then the daily price limit for all contract months shall revert to
$0.030 on the next business day.
• If the daily price limit is $0.030 and neither of the two contracts in the even month
cycle nearest to expiration settles on the limit bid or limit offer, without regard to
market direction, then the daily price limit for all contract months shall revert to
$0.015 on the next business day.

Chicago Mercantile Exchange Inc. (www.cme.com) is the largest futures exchange in the United States. As an international marketplace, CME brings together buyers and sellers on its trading floors and GLOBEX® electronic trading platform. CME offers futures and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. The exchange moved about $1.4 billion per day in settlement payments in the first 11 months of 2003 and managed $34.1 billion in collateral deposits at Nov. 30, 2003. CME is a wholly owned subsidiary of Chicago Mercantile Exchange Holdings Inc. (NYSE: CME), which is part of the Russell 1000® Index. Chicago Mercantile Exchange, CME and GLOBEX are registered trademarks of Chicago Mercantile Exchange Inc. Further information about CME and its products is available on the CME Web site at www.cme.com.
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03-194

Statement U.S. Meat Export Federation
President and CEO Philip Seng

Wednesday, December 24, 2003

With the USDA announcement Tuesday (Dec. 23) that a single presumptive positive case of BSE (bovine spongiform encephalopathy, commonly known as "mad cow disease") had been diagnosed in a Washington state dairy cow, the U.S. Meat Export Federation immediately committed its full resources in 13 offices worldwide to begin dialogs with agricultural officials and meat industry partners. Our message was simple: the U.S. beef production system is safe and the discovery of a single case of BSE doesn’t change this fact. In addition, we have assured our trading partners that maintaining a safe and wholesome food supply for our domestic consumers and export customers remains our highest priority. The discovery of this single case is proof that our system of safeguards and surveillance has worked.

Unfortunately, many of our trading partners have taken immediate action to temporarily close their borders to U.S. beef. Beef exports last year were valued at more than $3.2 billion and were on track to exceed that level in 2003. We are committed to doing everything we can, working closely with the USDA-Foreign Agricultural Service, to restore our trade as quickly as possible.
Our message to our trading partners includes the following points:

• The United States government will work to ensure that the investigation is rapid, accurate and thorough, and we will keep our trading partners and the Organization of International Epizootics (OIE) informed of all developments.
• As part of our BSE response plan, the farm from which the suspect animal came has been quarantined.
• The plant where the Holstein cow was slaughtered was not a participant in the beef export verification (BEV) program, meaning it does not export beef.
• USDA and the Food and Drug Administration (FDA) have developed and are implementing emergency response plans to prevent the unlikely spread of the disease.
• The U.S. recognizes that the OIE has established guidelines for trade in animals and animal products from countries that have detected cases of BSE. The U.S. government and private industry have been working with the OIE in advancing the science and application of safe trade in animal and animal products. This is especially important for countries that have put in place effective measures over a number of years to manage the risk of BSE and have taken aggressive steps to respond – as the U.S. has done.
It is also important to remember the following:
• The suspect animal was an adult Holstein cow that was non-ambulatory at time of slaughter.
• The animal was from a farm in Mabton, Washington, about 40 miles southeast of Yakima, which has been quarantined.
• The animal was slaughtered in a small, federally-inspected packing plant in Moses Lake, Washington, and all specific risk materials (such as spinal cord, brain, intestine) were rendered and not allowed into the human food chain.
• The animal was tested as part of USDA's BSE surveillance program. The presumptive positive was diagnosed using two tests, one of which was the immunohistochemistry test, which is recognized by World Animal Health Organization as the gold standard test for BSE. The brain samples were then flown to the Central Veterinary Lab at Weybridge, England. Confirmation is expected in three to five days from now.
• The animal was processed and, although there is no risk of infectivity in the meat, USDA will attempt to trace the product from this animal.
There is more than ample reason to maintain confidence in the U.S. beef production system, and USMEF and USDA will do everything in their power to communicate this confidence to our trading partners worldwide.

R-CALF USA Requests Specific BSE Mitigation Actions

(Billings, MT) In a letter to President Bush and United States Department of Agriculture (USDA) Secretary Ann Veneman, on the day of USDA’s announcement of a possible finding of BSE in a Washington state dairy cow, R-CALF United Stockgrowers of America (R-CALF USA) President Leo McDonnell requested that the United States “Immediately close the United States border to all imports of live cattle, beef, and both raw and manufactured livestock feed until the circumstances surrounding the suspected case [of BSE] are fully disclosed and understood.”

In its letter, R-CALF USA first praised the United States for its foresight in implementing meaningful safeguards to both minimize the risk of introducing Bovine Spongiform Encephalopathy (BSE) in the United States and for making preparations for the possibility that the disease may breach the nation’s firewalls. “Unfortunately, the United States may be facing its first case of BSE,” the letter stated.

McDonnell explained that the closure of the border is necessary to mitigate both the potential damage the live cattle market might sustain and to maintain consumer confidence in the nation’s beef supply following USDA’s announcement of the suspected BSE case. R-CALF USA had called an emergency meeting on the day of USDA’s announced finding and drafted its letter at the request of United States cow/calf producers, feeders, and livestock auction yard representatives participating in the meeting.

R-CALF USA said the rational for making the request to close the border was based on the high probability that if BSE were found in the United States, it would most likely have entered through imported ruminants or ruminant products; that the border closure was further needed to maintain the economic viability of the U.S. live cattle industry as it would prevent the build-up of excess supplies of beef and cattle, thus mitigating the potential for price-depressing oversupplies; it would allow the U.S. to rule-out that imported feed was the source of the suspected infection; and that such action would demonstrate that the United States considers the maintenance of a viable cattle industry and the health and safety of consumers a high priority.

McDonnell concluded his letter by stating, “We view this request as an essential step in preserving our domestic market and protecting consumer confidence.”

(30)

R-CALF USA, the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America is a national, non-profit cattle association representing cattle producers in the areas of trade and marketing. R-CALF USA has approximately 9,000 individual members in 46 states and 52 affiliated local and state cattle and farm organizations. For more information, visit www.r-calfusa.com or call 406-252-2516.

NCBA Advisory

December 24, 2003

To: NCBA Member Organizations
Contact: Rick McCarty, NCBA Denver 303-694-0305
Kendal Frazier 303-694-0305
Subject: BSE Updates

Dec. 24, 2003 BSE Information Update

The cow

The cow is a Holstein from a two-premise Washington State dairy operation with approximately 4,000 head. Those operations have been quarantined. No animals may leave the premises.
The animal was purchased into this dairy herd in October 2001 as a two-year old cow. The cow's age is estimated to be 4 to 4 ½ years old.
It was purchased by the dairy from one of two livestock auction markets in October of 2001. The records of the auction markets are being investigated.

The cow was culled Dec. 9 due to paralysis associated with calving difficulty.
The USDA veterinarian did an ante-mortem inspection and found nothing remarkable; the condition was consistent with birthing injury. The inspection by the USDA veterinarian at slaughter agreed with the original finding.

A sample was collected as part of routine surveillance. That sample arrived Dec. 11 at the National Animal Veterinary Services Laboratory in Ames, Iowa, which handles all BSE testing. Results showing positive for BSE were received on Dec.22

The presumptive positive samples were sent to the international reference laboratory in Weybridge, England for confirmation and were scheduled to arrive Dec. 24. Results are expected in three to five days.

The Investigation

Federal agencies such as APHIS, FDA and FSIS and the state of Washington have teams on the ground working the investigation.

The on-farm investigation is focused on two premises at this time as the animals in the dairy were commingled. The dairy's owners are very cooperative and have good records.
Work is underway to trace the animal back to its birth herd. USDA may have information on this in a day or two. Once that is done, there will be a trace forward.
The federal government intends to identify every herd this animal moved through, and other animals that moved in and out of those herds during the stay of the infected animal.

It is common to test offspring of suspect animals.

FSIS is investigating four operations that may have received product from the infected animal.

FDA is trying to trace the feed sources for the animal, as contaminated feed is the only known way to transmit the disease. It is believed that the contaminated feed was consumed prior to coming to the farm where it was culled.

FDA has issued a statement regarding its investigation of the potential involvement of FDA-regulated products associated with a BSE-presumptive cow in Washington State. http://www.fda.gov/bbs/topics/NEWS/2003/NEW00999.html

All feed facilities are inspected once a year. There are 1,826 facilities approved to handle ruminant material. Presently, there are only two out of compliance. When the feed ban was put in place in August of 1997, about 75 percent of the operations were in compliance. Now that is 99.9+ percent.

Food Safety

The potentially infectious material - central nervous system tissue such as the brain and spinal cord - never entered the human food chain. Any tissue at risk for harboring the infectious agent went into rendering.

Verns Moses Lake Meats, a Moses Lake, Wash., establishment, which processed the animal along with 19 others on Dec. 9, has issued a voluntary recall of 10,140 pounds of beef. This represents all the meat from the 20 carcasses. This is a Class II recall, meaning the beef poses an extremely low likelihood of risk to human health. This step is being taken as part of the "abundance of caution" surrounding this issue.

Economic Impact

As of noon, at least 10 of our trading partners had implemented temporary bans against importing U.S. beef. This includes the largest export markets of Japan, Mexico, South Korea and Hong Kong. Exports account for about 10 percent of total U.S. production.
The United States is discussing the issue with our trading partners. Some have offered their help.

U.S. Meat Export Federation reports that at least 44,000 metric tons of beef are in transit to these countries.

The Chicago Mercantile Exchange traded the limit down on Dec. 24. The CME will be open Friday for a shortened trading session (9 am to noon), as regularly scheduled.
The CME's Business Conduct Committee Dec. 24 voted to accelerate CME's schedule for expanded daily price limits in its live cattle and feeder cattle futures contracts. http://www.cme.com/abt/news/03-194PriceLimits5779.html

For the live cattle futures contract, on Dec. 26 the daily price limit will be 3 cents per pound. If the December 2003 or February 2004 contract month is locked either up or down the limit at the close on Friday, then the limit on Dec. 29 and Dec. 30 will be expanded to 5 cents per pound. Otherwise, it will revert to 3 cents per pound.

The same accelerated schedule will be in effect for feeder cattle futures at the CME.
The Commodity Futures Trading Commission said it will be monitoring the market for any potential manipulation.

The temporary loss of export markets is consistent with how the world has responded to news of BSE. Prior to the Canadian situation, that reaction was based on public perception. After the Canadian incident, the U.S. recognized that the science does not support a complete trade ban, that there are certain low-risk materials that can be traded. We need to base trade on science, not perception and this is the direction the United States is working toward.

The Canadian government announced today it was instituting import restrictions to limit the range of ruminants and ruminant products eligible to be imported from the U.S.
http://www.inspection.gc.ca/english/corpaffr/newcom/2003/20031224e.shtml

Additional Message Points as of 12/24

As USDA has confirmed, none of the specified risk materials from this cow, such as central nervous system tissue or spinal cord, entered the food supply. The BSE agent is found in those materials, not in meat like steaks and roast.

U.S. cattlemen applaud the abundance of caution that USDA is taking in this investigation and will cooperate fully in the process.

Cattle in the high BSE risk population (over 30 months) are market cows and bulls. Of the annual slaughter of approximately 35 million, only about 6.4 million animals are market cows and bulls and an NBA audit found that only 0.8% of these animals were non-ambulatory at slaughter. This represents only 0.14% of total animals slaughtered.

U.S. exports represent less than 10 percent of total U.S. beef production. In 2002, Japan represented 2.9 percent of total beef production, Mexico represented 2.3 percent, Korea represented 2.2 percent and Canada represented .8 percent.

Over the past 5 years, the United States has accounted for 47.9 percent of all Japanese beef imports. On average, the United States accounted for 84 percent of all Mexican beef imports.

It is too early in the investigation to predict any additional safety measures beyond the long-running and highly effective firewalls that have been in place for several years: import ban, feed ban and the U.S. BSE surveillance program, which identified this single case.

Media Summary

NCBA spokespersons continued to do interviews with all the national cable and network television outlets and numerous newspapers including USA Today, the Wall Street Journal, the New York Times and USA Today. NCBA held a technical and economic telephone news conference briefing with reporters from 72 media outlets including the Los Angeles Times, Chicago Tribune, Associated Press, National Public Radio, Des Moines Register and many others. During the briefing the NCBA officers and staff and Cattle Fax staff stressed that the U.S. beef supply is safe and that the BSE agent has not entered the food supply. NCBA Chief Executive Officer Terry Stokes is scheduled to appear on Fox News with Tony Snow on Saturday evening, December 27.

Rick McCarty
Executive Director - Issues Management
National Cattlemen's Beef Association
rmccarty@beef.org
303/850-3361