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Cattle Futures Fall as U.S. Beef-Supply Concerns Ease

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Aug. 9 (Bloomberg) -- Cattle futures fell from a five-month high after Tyson Foods Inc. remained the only U.S. meat processor to suspend use of a feed supplement that boosts animal weights, easing beef-supply concerns. Hogs declined.

Tyson said yesterday that “a small percentage of cattle delivered to multiple locations” were lame, spurring the ban of Zilmax, a feed supplement made by Merck & Co., effective Sept. 6. Cargill Inc., the second-largest beef packer, plans to continue to buy animals fed with additives. Yesterday, futures jumped 1.9 percent, the most in six months.

“It was a flash in the pan that’s not going to hold because just one packer doing it isn’t a big deal, and the others aren’t going to follow suit,” Paul Beere, a grain and livestock adviser at Prime Agricultural Consultants in Brookfield, Wisconsin, said in a telephone interview.

Cattle futures for October delivery fell 0.2 percent to settle at $1.26875 a pound at 1 p.m. on the Chicago Mercantile Exchange, the first drop in a week. Yesterday, the price reached $1.27675, the highest for a most-active contract since March 13. The commodity has declined 4.1 percent this year.

Tyson, the top U.S. meat processor, said yesterday that the number of lame cattle is “significant enough that we believe our decision is warranted” on the additive. The Springdale, Arkansas-based company said in a letter to livestock suppliers that the ban is an “interim measure” and the “evaluation of these problems is ongoing.”

Merck, based in Whitehouse Station, New Jersey, said that the supplement is safe. Tyson said in the letter that “this is not a food-safety issue.”

Feeder-cattle futures for September settlement dropped 0.2 percent to $1.57475 a pound. Yesterday, the price reached $1.59375, the highest since June 2012. The price has gained 12 percent in the past year.

Yesterday, cattle and feeder cattle jumped by the exchange limit of 3 cents before paring gains.

Hog futures for October settlement slid 0.3 percent to 84.975 cents a pound. The price has gained 12 percent in the past year.

To contact the reporter on this story: Marley DelDuchetto Kayden in Chicago at mdelduchett2@bloomberg.net

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