High Steaks: What’s Driving the Beef Price Surge?

With headlines dominated by tariffs and trade tensions, many are bracing for higher prices at the checkout. But when it comes to summer grilling staples, it’s not just tariffs turning up the heat—beef prices are already on a tear. Live and feeder cattle futures are up double digits in 2025, and when factoring in roll yield, cattle has become one of the year’s top-performing commodities.

One of the key drivers behind the surge in cattle prices is growing concern over the potential return of the “New World Screwworm”—a parasitic fly often described as a “flying piranha” for the damage it can inflict on livestock. Despite its name, the screwworm is a fly that lays its eggs in open wounds of animals (and occasionally humans). Once hatched, the larvae burrow into flesh, potentially killing a full-grown steer in just 10 days. The lifecycle is alarmingly fast: within three to five days, the larvae pupate and become flies, restarting the cycle. The screwworm plagued U.S. livestock producers for decades until it was nearly eradicated in the early 1980s through an aggressive “sterile fly technique” program. By the 2000s, the U.S. Department of Agriculture (USDA) had established a sterile fly barrier in Central America to prevent its northward spread. But now, experts warn that complacency and underinvestment in prevention may be allowing the threat to resurface—posing a renewed risk to the North American cattle industry.

Earlier this year, the USDA began treating new cases of screwworm in Mexico that had breached the sterile fly barrier, prompting the U.S. Secretary of Agriculture to suspend imports of live cattle, horses, and bison through land ports along the southern border as of May 11th. While the U.S. and Mexico are now working together to halt the pest’s northern advance, the import suspension is straining an already fragile supply chain. U.S. cattle inventories are at record lows, the result of prolonged drought and high feed costs that have constrained herd growth. With the added threat of screwworm, producers may be more inclined to sell now at higher prices rather than hold back heifers to rebuild the herd—potentially tightening supply further. These concerns have pushed front-month futures higher, increased backwardation in the live cattle curve, and sparked bullish sentiment among speculative traders.

Recent moves in the cattle market highlight the value of a risk-balanced approach to commodity investing. Inflationary pressures can emerge from unexpected supply chain disruptions—like disease outbreaks or weather events—that traditional production-weighted indices, which tend to overweight energy, may underrepresent. A more diversified commodity basket with greater exposure to agriculture and other sectors can better capture these dynamics and reflect the real-world costs consumers face.

Beef supply constraints aren’t likely to ease anytime soon—it could take more than a year to rebuild U.S. cattle inventories. Ongoing drought conditions, elevated feed costs, and uncertainty around screwworm containment all point to continued upside pressure on cattle prices.  However, higher beef prices may start to erode demand, which could help to ease prices. Earlier this month, the CEO of Pilgrim’s Pride noted that chicken demand remains strong as consumers pivot to more affordable proteins. As summer grilling season kicks off, don’t be surprised to see more chicken and less beef on backyard barbeque menus.

Happy investing!

Scott Smith
Chief Investment Officer