A well dispersed oxygen scavenging particulate compounded in a polymer matrix. The oxygen scavenging formulation consists of iron powder with a mean particle sizes within 1-25 um and pre-coated with at least one or more activating and acidifying powdered compounds, usually in the form of solid organic and inorganic salts of alkaline and alkaline earth metals such as sodium chloride and sodium bisulfate. The pre-coated iron particulate is dispersed into a polymer resin by using a conventional melt processing method such as twin-screw extrusion. The oxygen scavenging compound is mixed with polymer pellets in the solid state prior to melting. The polymer resin pellets and the coated iron powder are preferably treated with a surfactant in the dry state to help dispersing the iron/salt powder with the resin pellets. The melt extruded compounds are pelletized and kept in the dry state to prevent premature activation.