In an exclusive report on Friday, Cattle Buyers Weekly (CBW) reported that Cargill, JBS USA and National Beef Packing will stop buying cattle fed the feed supplement Zilmax™ . Cargill says the last of the cattle being fed Zilmax that are in its supply chain will be harvested by the end of September. Cargill will suspend purchases of Zilmax-fed cattle in North America, pending research being conducted by manufacturer Merck Animal Health. This will give producers adequate time to transition cattle currently being treated with Zilmax, it says in a statement on its website. CBW understands that JBS and National have started to inform their feedlot suppliers they will stop buying Zilmax-fed cattle, in JBS’s case from Sept 23.

Steve Kay, CBW Editor, reports the non-use of Zilmax causes some analysts to raise their forecasts for fourth quarter live cattle prices. They do so in the presumption that beef production in the quarter will be slightly lower. Zilmax adds an average 28 lbs. to the live weight of cattle it is fed to. More than 35% of cattle marketed each week are estimated to have been fed Zilmax. Any impact on weight won’t be seen until Sept. 6 at the earliest. That’s when Tyson Foods will stop buying Zilmax-fed cattle.

While Cargill has not linked Zilmax to any specific incidents involving animal well-being, it does believe more research is necessary to answer recently raised questions regarding the use of this product, it says. Consequently, Cargill supports Merck’s decision to suspend sales (from Aug. 16) of Zilmax in the U.S. and Canada. Cargill was the last major beef packer to allow cattle fed Zilmax into its beef supply chain, in June 2012, it says. One reason Cargill was initially reluctant to accept cattle fed Zilmax was a series of extensive beef tenderness tests that created concern about potential impact to product quality. Of the major U.S. packers, Cargill harvests the lowest percentage of cattle fed Zilmax, it says.

Analysis of how much the non-use of Zilmax might reduce beef production and raise cattle prices varies considerably. Weekly average beef production forecast will be lowered by 6 to 7M lbs./week from September to December, says CattleFax. So it forecasts an average $130/cwt. live cattle price, vs. an earlier forecast of $128. Other analysts don’t see anywhere near the same decline in production for several reasons. Placements of heavyweight cattle from earlier this year means more beef will be produced than expected.

One analyst’s forecast is for production of 6.443 billion lbs., down only 2.0% on last year. Another’s is for 6.300 lbs., down 4.1%. Both numbers are higher than their previous forecast. They also expect cattle feeders to switch to the other beta-agonist, Optaflexx™ , or feed to heavier weights with cheaper corn. So they have raised their live cattle price forecasts by only 50¢ to slightly over $126/cwt.