* Tyson concerned about cases of cattle with difficulty
* Tyson says doesn't know specific cause of these problems
* Merck says tests have proven Zilmax safe for cattle
* Rumours of Tyson action pushed CME cattle futures higher
By Theopolis Waters
CHICAGO, Aug 7 Tyson Foods Inc, the
largest U.S. meat processor, said it would suspend purchases of
cattle fed the growth enhancer Zilmax, saying it was worried
about cases of cattle with difficulty walking although it did
not know the specific cause of problem.
Rumours of Tyson's action sparked a sharp rally in Chicago
Mercantile Exchange cattle futures on Wednesday. Removing Zilmax
from feed rations would bring down the weight of cattle,
resulting in less available beef and likely drive up beef
Merck & Co Inc, whose animal health division
manufactures the additive, said in a statement that tests have
proven that Zilmax is safe and that it was working with Tyson.
Its website says that Zilmax has been used in cattle globally
for nearly two decades.
Tyson said it would suspend purchases beginning Sept. 6,
citing cases of cattle being delivered to its plants with
difficulty walking or being 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," it said in a letter to U.S. cattle feedlots.
"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 said.
October live cattle were 2.500 cents per lb higher at
127.125 cents in after-hours trading on Wednesday, with a
Midwest feedlot operator noting that if Tyson distances itself
from Zilmax, other meat packers may follow suit. The daily price
limit for cattle price moves is 3.000 cents.
Tyson's website shows that it has 26 percent of the U.S.
beef market and it on average processes 132,000 head of cattle a
Zilmax is blended with other feed rations and vitamins and
fed to cattle during the last few weeks they are in feedlots
before being processed into beef, the feedlot operator said.
"However, there will be a large amount of cattle that goes
through the pipeline before the effect of not using the additive
is seen, which could take upwards of 90 days," the feedlot
Merck said its animal health division had offered technical
assistance, both internal and external experts, to help Tyson to
understand what is behind the instances at its facility.
"Merck Animal Health is confident in the extensive research
and data behind the product and the fact that its safety has
been well demonstrated," it said.
Last month, Merck reported lower-than-expected second
quarter revenue, partly because of disappointing results for
animal health products. Animal health sales fell 2 percent to
$851 million, hurt by weak demand for swine products.
Shares of Tyson jumped to all-time highs this week after the
company reported on Monday that strong meat demand drove a
bigger-than-expected jump in quarterly profit.