Cattle market shook by Tyson news

Aug 9, 2013

Cattle futures rose to a fivemonth high after Tyson Foods announced last Wednesday that the company would no longer purchase animals fed with a Merck supplement, Zilmax.

According to a letter sent out to cattle feeders, Tyson is concerned that the supplement may be causing lameness in livestock.

“Some animal-health experts have suggested that the use of the feed supplement Zilmax, also known as zilpaterol, is one possible cause” for the animals being unable to walk, according to the letter. The “interim measure” is effective Sept. 6, and the “evaluation of these problems is ongoing,” according to the letter.

Rumors of Tyson’s action sparked a sharp rally in Chicago Mercantile Exchange cattle futures Wednesday. Removing Zilmax from feed rations could bring down the weight of cattle, resulting in less available beef, and drive up beef prices.

Zilmax is credited for cattle gaining 24 pounds to 33 pounds more than normal and is used to increase lean muscle, according to Steve Kay, editor of Cattle Buyers Weekly.

“This is not a food-safety issue,” according to the letter by Tyson, the biggest U.S. meat processor. “It is about animal well-being and ensuring the proper treatment of the livestock we depend on to operate.”

According to a statement from Merck Animal Health, animal well-being is a priority and Tyson’s letter came as a surprise.

“The facts are clear. The benefits and safety of Zilmax® (zilpaterol) are well documented. Zilmax has a 30-plus year history of research and development and rigorous testing. Worldwide regulatory agencies have reviewed extensive data on Zilmax and have concluded that use of Zilmax according to the label is safe in cattle. It is important to understand these data included rigorous animal health safety and well-being studies—conducted by University experts—that found the behavior and movement of cattle fed Zilmax is normal,” the company stated in a release.

“We are surprised by Tyson’s letter. We are confident that, based on all of the available data on Zilmax, the experience reported by Tyson is not attributable to Zilmax. Indeed, Tyson itself points to the fact that there are other possible causes and that it does not know the specific cause of the issues it recently experienced. We will continue to work with Tyson to help it identify those other causes. Again, we are confident that the totality of our data does not support Zilmax as being the cause of these experiences, and we remain confident in the safety of the product.”

“Zilmax has been used globally for nearly two decades in countries including South Africa, Mexico, Canada, the U.S. and South Korea,” Merck says on its website. “The safety of Zilmax is well documented by numerous independent, third-party experts.”

“Cattlemen and women believe in the right of farmers and ranchers to responsibly use FDA-approved technologies,” Forrest Roberts, the chief executive officer of the National Cattlemen’s Association in Washington, said in a statement. “However, we take every report of animal welfare issues very seriously. We believe these products can be used responsibly when managed properly.”

While some analysts are predicting other packers will follow suit, Cargill told reporters they have no plans to jump on the anti-Zilmax plan. — Traci Eatherton, WLJ Editor