Cattle futures eased, a little, from levels which for unfattened animals were at record highs after South Korea joined the countries slapping curbs on US beef imports, following the discovery of a controversial growth promoter.
South Korea suspended imports of beef from Swift Beef, part of the empire of Brazil meat giant JBS, after finding traces of zilpaterol, a growth drug banned in many countries over animal welfare fears.
Even in the US, where it has been in common use, Merck temporarily ceased sales of its zilpaterol product, Zilmax, earlier this year after beef processor Tyson Foods banned purchases of cattle which had been finished with the drug.
CME Group, which runs the Chicago livestock futures market, last month barred cattle fattened with zilpaterol from delivery against contracts.
South Korean officials said that they had found the tainted beef on September 24 in a 22-tonne shipment from Colorado-based Swift Beef.
While Swift accounts for a relatively modest 6% share of US beef exports to South Korea, the issue touches a raw nerve, with many consumers in the Asian country still wary after the outbreak of mad cow disease (BSE) in the US in 2003.
The South Korean government in 2008 watered down plans to lift restrictions on US beef imports after the proposal prompted angry street demonstrations in Seoul and other cities.
South Korea was the third-biggest buyer of US beef before the 2003 BSE finding, and has grown back into a substantial buyer, ranked sixth among purchasers in the first seven months of 2013 with imports of 51,446 tonnes, according to the US Meat Export Federation.
In Chicago, feeder cattle futures for October, which in the last session set a record high for a spot contract of 164.95 cents a per pound, boosted by ideas that weak grain prices will encourage demand for animals for fattening, eased 0.2% to stand at 164.55 cents a pound in late deals.
Live cattle for October dropped 0.1% to 128.125 cents a pound, with the better-traded December lot down 0.2% at 132.025 cents a pound.
"October cattle yesterday closed higher and priced in a higher cash trade. Today the market is not so sure," US Commodities said, flagging the South Korean suspension and restrictions on zilpaterol in "much of Asia and Europe".
"South Korea imports represent 13% of the total US exports year to date," the Iowa-based broker said.
'Would actually be supportive'
At Country Futures, Jerry Stowell said that the restriction had "caused weakness in live cattle futures".
However, "it may not end up being a big deal", he added.
"If in the end it results in all beta agonist [growth promotion] products being taken out of cattle feeding rations, then it would actually be supportive as it would reduce beef tonnage."
Shares in JBS, which was unavailable for comment, stood 2.4% higher at R$7.69 in afternoon deals in Sao Paulo.