The US Animal and Plant Health Inspection service (APHIS) announced in late November 2024 that New World screwworm (NWS) was detected in Mexico. The infestation was found in a cow in the southern Mexican state of Chiapas. The finding probably was not a surprise to US authorities. Before the elections, a story by the Wildlife Conservation Society noted how cattle trafficking in Central America opened the door for the parasite to spread in Mexico. Now the fear is that the infestation may have taken hold in southern Mexico, threatening a significant supply source for US cattle producers.

This pest can have a significant negative impact on the health of cattle. US and Mexican authorities have spent considerable resources in the past to push it away from US and Mexican borders. For now, US authorities have suspended the cattle trade with Mexico while they develop protocols to screen animals coming into the US.   The goal is now to resume trade in early January 2025, but there is still work to be done.

Feeder cattle prices have been trending higher since the announcement, although we do not think the market is currently expecting trade with Mexico to remain closed. If the border reopens in January, as many expect, then then impact on US cattle supplies will be limited. We think the suspension will reduce US cattle imports in late November and December by 150,000 to 170,000 head. These cattle would normally go into Texas and Arizona feedlots as well as background operations in the region. But the fact these animals did not enter during this time does not mean they will not be in the supply picture going forward. Once the border opens, and if the process in place is efficient, we could see these animals flow into the US in the first quarter. The bigger concern is if the infestation spreads in other parts of Mexico, forcing US authorities to significantly limit trade or suspend it for longer. Mexico was on track to ship around 1.4 million cattle to the US in 2024. As such, Mexico represents about 5% of the number of fed cattle coming to market. Already US beef market was bracing for less supply in 2025 and 2026, a function of a smaller cow herd, lower calf supplies and more heifers expected to be held back for replacement purposes. Disease restrictions and the possibility of higher tariffs on Mexican cattle present another source of risk for US beef production in 2025 and beyond.