New guideline will go into effect with deliveries beginning October 7
The Chicago Mercantile Exchange (CME) will no longer accept delivery of cattle fed the growth additive Zilmax, beginning with October deliveries on October 7, to conform with exchange guidelines for deliveries against CME live cattle futures, according to reports.
“We are letting the market know these Zilmax cattle no longer are merchantable in our view from a contract specification perspective because they will not be accepted by a majority of our approved slaughterhouses,” said CME Managing Director of Commodity Research and Product Development David Lehman. The exchange based its decision after two major packers, Tyson Foods Inc. and Cargill Inc., discontinued purchases of Zilmax-fed cattle, with the possibility that others may follow suit.
Terms of the CME’s live cattle futures require that cattle received during the delivery process be “merchantable” (healthy and not crippled or sick) and readily salable into normal commercial marketing channels. “This notice clarifies that cattle which have been fed additives which prohibit them from being purchased for slaughter under current commercial practices imposed by major cattle slaughter facilities are unmerchantable and are to be excluded from the delivery unit,” said the exchange in a statement.