Second screwworm US-Mexico border closure disrupts cattle trade; DDGS market sees little effect

A fresh outbreak of the screwworm in southern Mexico has prompted the US government to close its border to live cattle imports, dealing another blow to Mexico's livestock exports and deepening challenges for the dried distillers grains with solubles.

The US Department of Agriculture ordered the immediate closure of the southern border on late July 9. This is not the first time the US has closed its border to Mexican cattle over screwworm concerns. Similar restrictions were imposed late last year and earlier in 2025, creating a cycle of uncertainty and disruption for livestock trade.

Agriculture consultant Carlos Haaz described the situation as a "revolving door," with closures continuing until the outbreak is fully contained and US authorities confirm no risk of infestation.

The parasite, known for causing painful and destructive infestations in livestock, was confirmed about 370 miles south of the US border near Veracruz. Although far from major northern cattle corridors, US authorities imposed precautionary import restrictions, halting shipments from Mexico and triggering ripple effects across feed and grain markets.

"Look, they closed the door again... We'll keep going back and forth with the same situation until this is fully controlled and the US authorities say there's no longer much of a problem," Haaz said. "Although the northern part is still free of this, the US isn't taking it lightly, and that's why they keep closing the door. With so many cattle stuck and unable to reach US feedlots, demand for finishing feeds is significantly reduced."

Despite these trade disruptions, Mexico's DDGS imports from the US increased year over year, rising from 198,438/mt in May 2024 to 207,818/mt in May 2025, an increase of approximately 4.7%, according to the USDA's latest data. This reflects the complexity of the market as demand dynamics shift amid supply chain challenges.

Haaz also noted the broader pressure from a large US corn crop and strong South American supplies, which are squeezing prices and limiting export opportunities. "So, I don't think basis levels will help much anytime soon. Futures are the only thing currently keeping prices from falling further and maintaining some interest in DDGS. The problem is, other feed ingredients are much more competitive and attractive right now, which is limiting the amount of DDGS moving in the market," he said.

Another agriculture market specialist said feed formulators in northern Mexico have had to adjust rations based on tighter inventories and volatile prices for yellow corn and soymeal. "I've heard they've had to adjust rations based on availability, yellow corn and soymeal stocks are low, and many are making short-term buys since futures prices for September are even lower," the source said. This dynamic, coupled with a wider price gap between DDGS and soymeal, is pushing many producers to favor cheaper protein sources.

The specialist added that robust domestic soymeal supplies are also depressing demand for other feed byproducts like wheat bran, rice bran, and DDGS. "Soymeal's low price is hurting demand for DDGS and other alternatives across Mexico's feed sector," they said.

Meanwhile, on July 10, Mexican President Claudia Sheinbaum described the US government's decision to close the border to live cattle imports as "totally exaggerated," asserting that Mexico is following proper sanitary protocols.

As trade disruptions and oversupply persist, Mexico's DDGS demand faces ongoing pressure. "DDGS will still be used, yes, but probably less and less, there's just no room for more," Haaz said. "Overall consumption is declining, not rising."

Platts, part of S&P Global Energy, assessed US DDGS CIF New Orleans for July delivery at $186/st, and US DDGS Chicago truck market for the same delivery period at $161/st on July 11.