CHICAGO, May 2 (Reuters) - Chicago Mercantile Exchange cattle futures rallied on Thursday after the U.S. government said retail samples of ground beef tested negative for the bird flu virus.
Traders put risk premium back into the markets, having removed it earlier this week over concerns that possible positive tests for the H5N1 virus in ground beef would hurt consumer demand, brokers said.
The U.S. Department of Agriculture has reported bird flu in 36 dairy herds in nine states since late March. Dairy cattle are often processed into ground beef.
"The cattle industry received one piece of good news yesterday evening in that the USDA's sampling of raw ground beef found no trace of the bird flu virus," brokerage StoneX said.
CME June live cattle futures rose 2.95 cents to finish at 176.800 cents per pound after falling on Wednesday to the lowest price since April 15.
CME August feeder cattle rallied 3.475 cents to settle at 255.225 cents, after dropping to an April 16 low in the previous session.
"Yesterday the trade took risk premium off," a broker said. "They were afraid of what could happen: When in doubt, get out."
Bird flu likely circulated in U.S. dairy cows on a limited basis for about four months before federal officials confirmed the disease in March, according to a new federally funded research paper.
But USDA said on Wednesday that tests were negative for H5N1 in 30 samples of ground beef collected from retail outlets in states where dairy cattle herds were infected with the virus.
"These results reaffirm that the meat supply is safe," the USDA said.
In CME's lean hog market, June futures slipped 0.500 cents to close at 99.925 cents per pound and reached the lowest price since March 25.
(Reporting by Tom Polansek; Editing by Tasim Zahid)
