Cattle futures tumbled the most in 11 months in Chicago Tuesday, and feeder-cattle prices fell by the exchange limit as a case of mad-cow disease was reported in the U.S.  Corn, used in livestock feed, also slumped.

A case of mad-cow disease has been found in a dairy cow in central California, John Clifford, the USDA’s chief veterinarian, told reporters in Washington. Its meat did not enter the food chain and the carcass will be destroyed, Clifford said. This is the fourth confirmed case of the brain- wasting disease in the U.S. cattle herd since the first was discovered in December 2003 in an animal that came from Canada.

“It’s all fear,” Chad Henderson, a market analyst for Prime Agricultural Consultants Inc., said in a telephone interview from Brookfield, Wisconsin. “I don’t know if it’s going to affect beef demand much. The problem is the perception will run this market right now.”

Cattle futures for June delivery fell by the daily limit of 3 cents, or 2.6 percent, to settle at $1.11575 a pound at 1 p.m. on the Chicago Mercantile Exchange. That’s the lowest level since July 1 and the biggest percentage drop on a most-active contract since May 23.

Prices tumbled 21 percent in December 2003, when the U.S. government confirmed a case of mad cow disease had been found. U.S. beef shipments of beef plunged 82 percent to 460.3 million pounds in 2004 as importers shunned the meat, government data show.

The commodity pared losses in electronic trading after the settlement. Futures fell 2.3 percent to $1.1195 at 2:56 p.m. in Chicago.

‘Past the Nervousness’

“We’ve matured past the nervousness,” Don Roose, the president of U.S. Commodities Inc., said in a telephone interview. “We found our meat is controlled and safe. The meat did not enter the food consumption chain, and that’s why the market this afternoon has bounced.”

Feeder-cattle futures for August settlement declined by the 3-cent limit, or 1.9 percent, to close at $1.51225 a pound on the CME. That’s the biggest loss since Sept. 22.

The mad-cow announcement “could also hurt the grain markets, with all livestock prices headed down,” Henderson said. “It’s just not going to be positive for corn or meal demand.”

Corn futures dropped 0.7 percent to close at $6.08 a bushel at 1:15 p.m. on the Chicago Board of Trade.