Steve Meyer in the CME Group’s Thursday Daily Livestock Report, speculated that the Wednesday night market rally was based on the expectation that the Tyson ban on Zilmax will reduce beef supplies coming to market in the next 12 months.

“It is a reasonable expectation given the significant carcass weight gains that have been attributed to the inclusion of beta agonists like Zilmax in feedlot rations. The question that the market will ponder in the coming days, however, is not whether, but how big of an impact, this ban will really have on beef tonnage.”

A big unknown is whether other packers will follow Tyson’s lead, the newsletter says.

 

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“There have been times when packers have had divergent policies in this regard. Tyson accounts for a little over a quarter of the daily steer/heifer slaughter. If other packers continue to accept Zilmax fed cattle, the overall impact on steer/heifer carcass weights will be more limited.”

The move has economic implications for both feeders and packers, but Meyer says that, with feed costs coming down, Tyson’s move “may not be as economically negative for feedlots as it would have been even six months ago.” Meanwhile, for packers, “heavier carcasses imply better operational efficiencies but, at the same time, they also make it more difficult to market some muscle cuts. End users continue to struggle with increasing muscle sizes and packers have had to discount some items in order to market them.”

NCBA weighs in, confident but seeking more answers

In a statement released Thursday, Forrest Roberts, CEO of National Cattlemen’s Beef Association, said NCBA’s membership believes in the right of farmers and ranchers “to responsibly use FDA-approved technologies. We also believe in Tyson’s right to make individual company decisions that they feel are in the best interest of their business. We do not have all the details regarding the animal welfare concerns cited by Tyson in the letter to their cattle suppliers. However, we take every report of animal welfare issues very seriously.”

The statement goes on to say that NCBA has expended significant resources to address questions about the use of beta-agonists relative to animal welfare concerns. “We convened experts across the beef supply chain who have conducted extensive research on beta-agonists, and engaged cattle feeding and animal health experts who have many years of experience using these products. We will continue these efforts until we have solid answers to these questions. In the meantime, we believe these products can be used responsibly when managed properly.”

 

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