Nate Donnay argues the New World screwworm is still a limited direct threat to dairy, but it could become a modest price/support story if it spreads and forces milk dumping, cattle movement restrictions, or longer treatment periods. His base case is that dairy farms are better positioned than beef ranchers to detect and treat infections quickly, yet the market should watch the geographic spread closely because even small production hits can move dairy prices.
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This is a focused interview with Nate Donnay of StoneX about how the New World screwworm outbreak could affect US dairy. His core thesis is balanced rather than alarmist: the outbreak is a real operational risk for dairy producers, but it is not yet a systemic supply shock, and the eventual market impact depends mainly on how far the fly spreads and how many cows are infected at any point in time. He repeatedly stresses that dairy is different from beef ranching because dairy farms see cows multiple times a day, which should make wound detection and treatment faster. He explains the biology and history of screwworm in plain terms: it lays eggs in wounds, larvae feed on living tissue, and the pest was once pushed out of North and Central America using sterile male flies. …
Tactically, the immediate setup is a watch-the-cases story: if infections stay clustered, the dairy impact should remain contained, but any jump in spread or movement restrictions could quickly matter for pricing. Near-term trade risk is more about a bad headline accelerating fear than about a proven milk supply shock.
Over the next few weeks to months, the base case is a modest but potentially rising dairy risk premium if screwworm continues moving outward and producers face repeated dumping or transport constraints. The setup improves if USDA data show low infection penetration and controlled geography; it worsens if cases jump into additional dairy-heavy regions.
Structurally, the video frames livestock disease as a recurring feature of dairy and beef markets rather than a one-off shock. The longer-run implication is that biosecurity, movement controls, and regional disease containment can alter milk supply and price formation even when the disease itself is endemic elsewhere.
If 5% of dairy cows in Texas and New Mexico get infected and their milk dumped, it would reduce US milk production by about 0.4%, leading to roughly a 4% increase in dairy prices.
New World screwworm infections in dairy cows requiring treatment will force milk dumping for 10-20 days, reducing revenue for dairy farmers.
New World screwworm will likely spread further from Texas to cover a geographical area that would encompass about 38% of US milk production.
What is the New World screwworm and why is its spread a concern for dairy producers?
Nate explains that New World screwworm is a parasitic fly whose larvae infest open wounds and consume living tissue. He says it historically affected warmer regions, was eradicated from much of North and Central America with sterile flies, and is now spreading north again, which makes it a renewed concern.
What are the biggest risks to dairy producers from the outbreak?
He says infected cows can suffer severe pain and can die if untreated, but dairy farms are better positioned than beef operations to spot wounds quickly. The main downside is that treated milk must be dumped for a set withdrawal period, which reduces revenue and adds treatment costs; calves may also face some risk, though long-term production effects are uncertain.
How are movement restrictions affecting the dairy industry?
He says the US is restricting animal movement within a 12.5-mile radius around infected farms to slow spread. That could disrupt dairy operations because cattle are frequently moved between farms, replacement heifers are transferred, and some dairies now also move animals into beef operations.
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