For many months, cattle producers and markets have operated under the threat of New World Screwworm coming to the US. Now that it’s here, the industry can get on with the reality of dealing with it.
In an Oklahoma State University letter called Cow-Calf Corner, Extension Livestock Marketing Specialist Derrell Peel went on to say the bad news is that NWS will be costly and a management headache for affected producers and those nearby, along with industry and agency folks tasked with controlling and eradicating the pest. Time spent planning and anticipating an outbreak now shifts to actions.
PSYCHOLOGICAL EFFECT
The psychological effect has been mostly one of relief, especially in futures markets, Peel said. The arrival of NWS has been one of many sources of uncertainty hanging over cattle markets for months.
Confirmation of NWS in the country removes one source of uncertainty and allows the market to focus on the reality, which has largely been priced into the market, he said.
The “good” news in all this is that it is not a broader market issue, Peel said. NWS will affect relatively few animals and is not something that will affect the cattle supply or beef production. It also is not a food safety issue and there are no effects on meat. Beef market supply and demand fundamentals are not affected and no significant market effects are anticipated.
Additionally, no major trade effects are warranted or expected relative to NWS, Peel said.
However, the reaction of trade partners is unpredictable, he said. Canada has announced a temporary ban on livestock from Texas. This is seen as a largely symbolic political move as it will affect a very small volume of trade.
Although there is significant bilateral cattle trade between Canada and the US, very few Texas cattle typically are involved, Peel said. Canada is well north of the climate boundary for NWS, and the threat is minimal.
MORE UNCERTAINTY
Another part of the uncertainty about NWS is the continued closure of the Mexican border, Peel said. It is uncertain if the fact of NWS in the US will change political decisions regarding the status of border. The market will continue to wait for news about when the border might open.
Once again, the effects are more related to the uncertainty than the reality, he said. When it happens, opening the border likely will be a deliberate and relatively slow process.
Over time, Mexican cattle flows into the US may rebuild with marginal effects on feeder cattle supplies in the country but no immediate disruptive shocks to cattle markets are anticipated.
Like most disasters, the effects of NWS primarily will be local, Peel said. It will take significant efforts and dollars to ensure a perimeter around the outbreak and effective animal movement controls to contain the pest along with diligent monitoring and treatment of any affected animals.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $256.28 per cwt to $264.00, compared with last week’s range of $256.19 to $257.34 per cwt. FOB dressed steers and heifers went for $401.64 per cwt to $410.90, compared with $401.57 to $405.30.
The USDA choice cutout Tuesday was up $4.25 per cwt at $400.31 while select was up $5.47 at $381.06. The choice/select spread narrowed to $19.25, from $20.47 with 66 loads of fabricated product and 28 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $456.94 per cwt, and 50% beef was $185.94.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.23 to $1.43 a bushel over the Jul corn contract, which settled at $4.09 3/4 a bushel, down $0.01 3/4.
No live cattle contracts were tendered for delivery Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $373.00 per cwt, up $2.44. This compares with Tuesday’s Aug contract settlement of $368.15, down $2.27.