The decision follows a report from the Shanghai Food Safety Office which said that the company had tested positive for excessive antibiotics in eight of the 19 batches of raw chicken samples.
State-broadcaster China Central Television had earlier reported that Liuhe and other suppliers weren't properly inspecting chicken bought from farmers for antibiotics and hormones.
Fast food chain McDonald's has also stopped sourcing chicken from the beleaguered supplier since August 2012.
The contract terminatios have resulted in the closure of Liuhe's processing plant in Pingdu city.
