Looking to the Futures

Live cattle futures (/LE) rolled to the August contract on June 8, making /LEQ26 the new active month. Futures have remained strong following news that New World Screwworm (NWS) crossed into the United States from Mexico. Aside from a small outbreak in the Florida Keys in 2017, NWS had been eradicated in the United States since 1966.

NWS infects cattle by depositing larvae into open wounds, where the larvae feed on living tissue. If left untreated, the infestation can cause rapid health deterioration and may be fatal. NWS remains endemic in Cuba, the Dominican Republic, and parts of South America.

The sterile fly technique has historically been used to control NWS outbreaks. The method involves releasing sterile male flies to disrupt reproduction and gradually reduce the screwworm population over time.

The USDA has partnered with the U.S. Army Corps of Engineers to establish a sterile fly production and dispersal center at Moore Air Base in Edinburg, Texas. The location was selected for its proximity to the border. The USDA also works with an international sterile fly production facility in Panama that produces about 100 million sterile flies each week for shipment to Texas.

As of June 9, there were six confirmed NWS cases in the United States, compared with 27,975 cases reported in Mexico since November 2024.

U.S. cattle imports from Mexico remain suspended, with the last shipment arriving nearly a year ago, when 4,686 head were imported in July 2025. By contrast, imports from Canada increased year over year, rising to 56,018 head in April from 36,963 a year earlier.

Mexico has halted imports of most U.S. livestock, including live cattle, although the overall impact may be limited because it imported only 1,083 head in April.

Several U.S. states, including Florida, Georgia, Tennessee, and Montana, have also implemented import restrictions on Texas beef. As a result, logistics concerns may pose a greater threat to the supply chain than NWS itself.

Although the U.S. cattle herd remains at a 75-year low, efforts have been made to support producers and expand market access for small processors. Most recently, the USDA provided $60 million in a fourth round of grant funding through the Meat and Poultry Processing Expansion Program to support small and very small processors.

The Choice/Select spread was 16.96 on Wednesday morning. Choice cutout was 394.81, up 1.91 from the prior day, while Select beef was 377.85, up 0.92 from the previous day.

Live cattle futures (/LEQ26) were trading at 241.775 on Wednesday afternoon. The one-year, one-day chart shows a slight pullback after the previous high was reached on May 1. August contracts are trading just below the 20-day and 50-day simple moving averages but remain above the 9-day and 200-day simple moving averages. Implied volatility was 16.37%.

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