Cattle Futures Spike on Feed Issues

It appears cattle fed with certain “supplements” are discovered to be “lame” at time of slaughter.  Cattle futures spiked to a five month high upon the outlook domestic beef supplies can contract a major food company has halted purchases of animals fed with supplements made by a prominent pharmaceutical company.  Yes, you read right.

Cattle suppliers were sent a letter by Tyson Foods claiming the reason for some animals “not being to ‘walk'” is possibly from a feed supplement called “Zilmax” (or, “zilpaterol”) made by Merck & Co.  Merck claims the supplement to be safe, and the evaluation of the animal problems continues with this “interim measure” commencing on September 6th.
Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, had this to say regarding the current cattle futures situation, Tyson Foods not purchasing animals that use Zilmax is a game changer.  Europe and China don’t use Zilmax.   This will move prices higher.”  Moreno added, “Traders see a decline in cattle (futures) into the 4th quarter a bullish factor and if we see a production decline we might see prices go even higher.”

Since late June the trend for cattle futures has been up with some choppy action as of late.  After this spike, lets be patient for cattle futures to retrace and dip back down before buying.


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