Screwworm or Supply Cycle: What's Driving Cattle?Live Cattle FuturesCME_DL:LE1!the5erstradingThe cattle market sits at record highs because of a historic supply squeeze, and the screwworm is amplifying that story rather than creating it. US herd inventory has fallen to a 75-year low, beef cow numbers are down about 285,000 head, feedlot placements dropped roughly 9.7% in May, and weekly slaughter is running 22,000 to 32,000 head below last year. Set against beef demand near a 40-year high, that scarcity has pushed fed cattle toward $250 per hundredweight and feeder cattle to roughly $375. This is the dominant force in the market. Onto that tight backdrop, the New World screwworm adds a fresh and escalating supply threat. The pest already closed the Mexican border to feeder-cattle imports, a key driver of 2025's record prices, and now the first US detections since the pest's 1966 eradication have appeared. Officials have confirmed 19 cases across Texas and New Mexico since June 3, with Terrell County emerging as a focal point. Texas has imposed animal-movement quarantines across more than a dozen counties, while the USDA releases tens of millions of sterile flies each week. Because the fly's roughly 21-day life cycle means containment takes several reproductive cycles, this risk will not resolve quickly. For prices, the screwworm is bullish at the margin. Any domestic quarantine that strands cattle, or any further squeeze on Mexican imports, tightens a supply that is already historically thin. But the market is showing late-cycle fatigue, with the August live cattle contract repeatedly failing at $250 resistance even as cash trades higher. The strain is acute downstream, where packer margins are running roughly $300 to $330 per head in the red, forcing the slaughter cuts that tighten beef supply further. The screwworm, in other words, is an accelerant on an already late-cycle market, not the origin of the move. The honest read is that the outbreak is a genuine, watch-closely risk that amplifies a supply story already in control of the market. The upside catalysts, the outbreak's spread and the status of the Mexican border, sit alongside clear late-cycle warning signs: record prices, deeply negative packer margins, and repeated failure at technical resistance. That combination points to higher volatility rather than a clean one-way bet. Producers with cattle to sell hold strong leverage, while buyers and packers face a margin vise. Watch the outbreak's geography and the border closely, but remember the market was priced for scarcity well before the first fly crossed the line.