What's Next

The inevitable has happened. The USDA announced last week two discoveries of New World Screwworm (NWS) in Texas. It is the first outbreak of NWS in the U.S. in 60 years. The USDA said it is taking immediate action to contain and eradicate the pest including establishing a 20-kilometer quarantine zone, increasing surveillance and trapping efforts, deploying response personnel, and accelerating the release of sterile screwworm flies. A new sterile fly production facility, under construction beginning in April, is not expected to be operational until November 2027.

The discovery raises countless questions for the cattle sector. Will the infestation spread? Will there be enough sterile flies produced? Could the U.S. reopen the border to Mexican cattle now that the infestation has spread to the U.S.? Will the infestation further delay herd rebuilding? How will beef production be affected? Will the discovery affect consumer demand for beet?

News of the discovery dominated cattle markets last week. Prices initially fell as funds liquidated positions but then quickly recovered and moved higher on underlying market conditions. Over the weekend Canada imposed a ban on imports of cattle from Texas. Volatility will be a market feature as issues develop and sort themselves out. Producers’ risk management strategies will be a premium this summer and fall.

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