Suspected screwworm infestation in Texas sends samples to federal lab in Iowa for testing
Unconfirmed reports of a possible New World screwworm infestation in South Texas sent another wave of anxiety through cattle futures Wednesday, even as cash cattle prices remain historically strong.
Samples from two calves on a ranch near La Pryor, Texas, have been sent to a federal laboratory in Iowa for testing after ranch workers discovered wounds containing larvae suspected to be New World screwworm, according to Reuters. The reports surfaced Wednesday amid growing concern about the parasite’s steady movement north through Mexico.
While federal officials have not confirmed a U.S. case, traders reacted swiftly, pushing cattle futures lower as rumors and speculation spread through the marketplace.
“It’s close now,” said Brad Kooima, a market analyst with KKV Trading. “Last week there were 22 reported cases within 100 miles of the border. I don’t think anybody — most of us, I guess I should say, me at least — is thinking there’s any way you’re going to keep it out when it’s that close.”
Kooima said New World screwworm has dominated market conversations for the past several trading sessions, contributing to a sharp disconnect between futures prices and the underlying cash cattle market.
“I think we’ve been dealing with screwworm almost exclusively for the last three days in our futures market,” he said. “The whole trade is worn out with all this stuff. Stay tuned. Fasten your seatbelt. It’s one day to the next.”
The reaction has been particularly noticeable in feeder cattle futures, which traders view as especially vulnerable to movement restrictions or disruptions tied to a confirmed infestation.
But some analysts question whether the long-term impact will match the market’s initial response.
“We have really blown this out of proportion,” said David Ericson of Ag Optimus.
Ericson noted that cash cattle trade has remained largely steady despite the headlines and suggested the market may eventually refocus on underlying supply fundamentals.
“If it is officially confirmed, will it really matter, or will it be a buy-the-fact, sell-the-rumor type of situation?” he said.
Kooima agreed that the industry will eventually need to separate the biological threat from market speculation.
“This is treatable,” Kooima said. “Part of me is like, let’s get it in the market. Let’s figure out that we’re going to treat it and let’s get on down the road and go back to normal.”
Despite the volatility in futures contracts, cash cattle prices remain near record territory. Kooima noted that negotiated cash trade in parts of the Plains reached $257 per hundredweight last week, only a few dollars below recent all-time highs.
Supply remains the market’s overriding fundamental, he said.
“We’re going to find out that we still don’t have enough cattle to go around,” Kooima said. “I still think you’ve got a shot at having a very strong cash market for the balance of June.”
Market participants have long feared the economic consequences of New World screwworm reaching the United States. The flesh-eating parasite lays eggs in open wounds, and the resulting larvae feed on living tissue. The pest was eradicated from the U.S. decades ago through a sterile fly release program but has steadily advanced northward through Central America and Mexico over the past year.
