In a notice to its customers dated Sept. 23, CME, the world's largest futures exchange operator, said it would end delivery of cattle against contracts traded on its exchanges. CME will implement the policy starting Oct. 7.
In August, Merck Animal Health, which manufactures Zilmax, suspended sales of the growth-promoting supplement in the United States and Canada pending a scientific audit. The move came shortly after Springdale, Ark.-based Tyson Foods Inc. announced the company would stop buying cattle fed Zilmax starting Sept. 6. The company expressed concern about cases of cattle with lameness and other mobility problems, although Tyson said it did not know the cause of those problems. Cargill followed suit with a similar announcement, saying it would suspend purchases of Zilmax-fed cattle in North America pending the results of Merck's audit. Cargill was the last major beef packer to allow cattle fed Zilmax into its beef supply chain in 2012.
Cattle futures prices climbed more than 4 percent after Tyson's announcement. Removing Zilmax from feed would cause the cattle to lose weight, resulting in tighter supplies of beef and higher prices for beef.
The zilpaterol hydrochloride-based compound can add 24 to 33 lbs. of live weight to steers and heifers in their last 20 days of time on feed; and it is said to double the percentage of carcasses that grade Yield Grade 1 and halve the percentage of Yield Grade 4s and 5s, producing leaner beef. Sales of Zilmax in the US and Canada totaled $159 million in 2012. An estimated 75 percent of all US cattle on feed were being fed either Zilmax or its competitor, Eli Lily's Optaflexx. Optaflexx remains on the market.