Live Cattle Futures Hit Record High as Prices Notch Fourth Weekly Gain Amid Screwworm Threat

• Live cattle futures gain for a fourth consecutive weak as prices hit record high.
• New World Screwworm threat from Mexico continues to offer support to the market.
• Traders looking to get long may want to wait for entry upon return to 9- or 21-day exponential moving average.

Live cattle futures on track for a fourth weekly gain amid tight supply

Live cattle futures (/LEV5) rose over 1% Friday as prices track toward a fourth weekly gain amid a tightly supplied market. 

Prices for August are up 6.6% since the start of the month. If those gains hold, it would market the largest monthly percentage increase for prices since January 2024. Moreover, a positive close in August would mark sixth consecutive monthly gain for the commodity.

Since the start of the year, live cattle futures are up over 24%, the best performance since 2010 when prices rose just over 25% for the entire year. That puts prices just 1% away from challenging 1978’s yearly performance of 1978 when prices rose nearly 40% for the year. 

New World Screwworm threat drives Cattle prices higher even as U.S. steps up protection measures

Since May of this year, the United States has kept the border closed to Mexican cattle because of a new world screwworm outbreak in the country. 

The New World screwworm (Cochliomyia hominivorax), or NWS, is a parasitic fly whose larva feed on wounds of cattle and other warm-blooded animals. Infested cattle can die within 10 days without treatment. 

The United States eradicated the pest in the 1960s and although there have been multiple reintroductions in the 1970s, the U.S. has avoided damaging events to livestock.

Now, however, an outbreak in Mexico is threatening the United States’ eradication status. Mexico alerted U.S. authorities of the outbreak in Mexico back in November of 2024. Since then, the pest has advanced north toward the U.S. border, prompting the U.S. ban on imports of Mexican cattle months later. 

Earlier this month, the U.S. Secretary of Agriculture Brooke Rollins announced a new plan to fight the threat, updating an earlier five-pronged plan issued in June. The updated plan included new funding of up to $100 million to innovate strategies to fight NWS, such as sterile fly production. The USDA also announced the construction of a sterile fly production facility in Edinburg, Texas. It will be the only facility of the kind in the U.S., with the ability to produce 300 million sterile flies per week. 

The announcement was a welcome development for U.S. cattle farmers who are increasingly worried about the advancing pest. However, it also shows that the threat has increased. If NWS makes its way into the United States, it could cause over $100 billion in economic damage to cattle and livestock industries. 

The threat of this potential reality, along with the decreased supply from restricted imports from Mexico has helped to support live cattle futures prices. Meanwhile, cutout prices, an indicator for wholesale prices, are near record highs, suggesting that U.S. consumers haven’t pulled back to a significant degree on their beef purchases despite higher prices—a sign of solid demand. 

Trading live cattle futures

Live cattle futures traded at 238.475 on Friday to close out the week. This marked a fresh record high for the commodity. 

Prices rose above the 50-day simple moving average (SMA) in April and have traded above the moving average since then, with it offering support during a down move in late June and early July. 

Since July, prices have been supported by the 9- and 21-day exponential moving averages (EMAs), with the 9-day EMA being unbroken since then. On the few deeper pullbacks we’ve seen, mostly contained to trading during early and mid-August, the 21-day EMA supported prices on an intraday basis. 

That said, prices have pulled well above those EMAs, which suggests that the current rally may need to cool off before moving higher. Traders who are looking to get long may want to wait to enter when prices return to the 9- or 21-day EMAs to gain a strategic entry into the commodity. 

Alternatively, trying to short this market poses a high-risk trade since it would be fighting a strong uptrend that has been defined by consistent technical support from the EMAs.