Tyson decision against growth promotant boosts cattle futures
By Rita Jane Gabbett on 8/8/2013
Live cattle futures prices jumped Thursday on the news that Tyson Foods would stop accepting cattle fed the growth promotant Zilmax on Sept. 6, over concerns it might contribute to animals arriving at slaughter unable to walk.
When fed at the recommended 20 days, Zilmax-fed cattle show an improvement in carcass weight gain of 24 to 33 pounds, according to product maker Merck Animal Health, which advises cattle feeders to allow for a three-day feed withdrawal for Zilmax.
“This is a game changer for the cattle industry,” wrote Archer Financial Services commodity broker Dennis Smith of Tyson’s decision. In a futures market report this morning he wrote, “If the use of Zilmax is dropped by the industry, it’s going to be very bullish for the deferred cattle contracts.”
In a letter to its cattle suppliers, Tyson wrote, “There have been recent instances of cattle delivered for processing that have difficulty walking or are unable to move. We do not know the specific cause of these problems, but some animal health experts have suggested that the use of the feed supplement Zilmax, also known as zilpaterol, is one possible cause. Our evaluation of these problems is ongoing but as an interim measure we plan to suspend our purchases of cattle that have been fed Zilmax.” The letter gave cattle feeders 30-day notice and takes effect Sept. 6.
“This is not a food safety issue,” the Tyson letter noted. “It is about animal well-being and ensuring the proper treatment of the livestock we depend on to operate.”
Smith, however, suggested Tyson might have other motives.
“Tyson has stated they’re doing this because of animal welfare issues. Most likely, they’re doing it to open the door for beef export business,” Smith wrote. “It’s well known that our export customers don’t want meat that has been fed growth enhancers. This will allow beef exports to increase and force beef production lower, providing a one-two bullish punch to the industry.”
Cargill spokesman Mike Martin told Meatingplace that in late spring 2012, Cargill began accepting cattle fed Zilmax.
“While Cargill has not completely embraced the use of growth promotants due to the potential resulting lower quality of meat, the vast majority of the beef cattle we harvest come from third party ranchers and feedlots that we have little control over,” the company said in a general statement about promotants.
The marketing implications of growth promotant are also not lost on Cargill.
Its statement goes on to say, “To keep our plants running and meet customer demand, we find ourselves in a position where we must harvest cattle that have been fed growth promotants, although we do harvest a substantial volume of cattle dedicated to our premium beef programs that have not received them.”
A JBS spokesman did not immediately respond to a request for comment.