Weekly protein report: Dairy producers manage through summer production pressures

11 July 2026

21 minute read

By: Jim Wyckoff

South America

North America

Asia

Cattle futures bears may be showing signs of selling exhaustion

August live cattle on Wednesday lost $0.80 to $237.625 and hit a five-week low early on. August feeder cattle rose $1.40 to $362.05. The live and feeder cattle futures markets saw more technically based short selling and weak long liquidation as prices are trending down on the daily bar chart. A “risk-off” day in the general marketplace Wednesday also worked against the cattle market bulls. However, the high-range daily closes do hint the bears may now be exhausted. Livestock stress is likely this week and into the weekend due to hotter temperatures in the Plains states. USDA at midday Wednesday reported still no cash cattle trading taking place so far this week. The agency on Monday said cash cattle trading last week averaged $255.12, which is down $4.22 from the week prior’s average price.

The Screwworm border: A reopening calculus turned upside down

By Jim Wiesemeyer

With New World screwworm now established in Texas, the biosecurity logic for keeping Mexican cattle out has weakened even as the eradication fight intensifies. Here is a realistic assessment on the timing, the options on USDA’s table, and the damage the standoff is inflicting on herds on both sides of the line. 

For nearly a year, the central question hanging over the US/Mexico livestock corridor was straightforward: how does USDA reopen the southern border to Mexican feeder cattle without importing New World screwworm (NWS) along with them? On June 3, that framing collapsed. USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed the first domestic NWS detection in more than half a century  —a three-week-old calf near La Pryor in Zavala County, Texas — and by June 30 industry tallies put the count at 27 confirmed animal cases across Texas and New Mexico, most of them domestically acquired. The pest is here. That single fact rewrites the entire reopening debate, and it is the starting point for any honest analysis of what comes next.

The pattern that got us here

This is USDA’s third closure cycle, and the track record explains why producers treat every reopening signal with suspicion. The department first shut the border in November 2024, reopened it in February 2025, then closed it again on May 11, 2025, as detections marched north through Mexico. A carefully sequenced phased reopening began July 7, 2025, at Douglas, Arizona — and was scrapped within 48 hours after a fresh case surfaced roughly 370 miles south of the border. The corridor has stayed shut to cattle, bison and equines ever since. USDA Secretary Brooke Rollins spent the spring of 2026 signaling a possible risk-based reopening at the westernmost ports, sitting some 800 miles from the nearest known case, with an announcement teased “within two to four weeks.” Then screwworm crossed into Texas, and Mexico responded by suspending most US live-animal imports of its own. The border is now effectively closed in both directions.

Why the calculus flipped

The original rationale for closure was prophylactic — keep an exotic pest out of a clean US herd. That logic loses force once the pest establishes a foothold on the US side. Asked directly in Kerrville whether the domestic detections change the import ban, Rollins allowed that the tension “is not lost” on her and that USDA is watching the data closely. The department has also begun explicitly weighing the economic cost of a prolonged closure against a biosecurity benefit that, with NWS already breaching the line, is no longer absolute. That does not mean a reopening is imminent. It means the department’s decision has shifted from a near-binary keep-it-out question to a harder cost-benefit judgment about managing a shared, cross-border problem — one in which additional imported animals could still add to the infested load and complicate the domestic eradication campaign.

How long a reopening realistically takes

Most do not expect a clean, full reopening in 2026. Economists Farm Journal surveyed were split, with the largest bloc (about a third) once penciling in February 2026 — a date that has come and gone. The binding constraints now are eradication progress and sterile-fly capacity, not the calendar. USDA’s domestic containment rests on the sterile insect technique, and the supply chain for sterile flies is still ramping: the Moore Air Base dispersal facility in Edinburg, Texas, went active in June with more than 129 million sterile flies released since February, Mexico’s renovated Metapa facility is targeted to reach 60 to 100 million flies weekly around mid-2026, and the roughly $1 billion domestic production plant that broke ground in South Texas this spring will need an estimated 18 to 24 months to reach full output. Until the sterile-fly barrier is credibly re-established and the Texas cluster is contained, any reopening will be narrow, conditional and reversible. A limited, port-by-port resumption is plausible within months if containment holds; a return to normal flow is a 2027 story at the earliest, and analysts such as Oklahoma State’s Derrell Peel have been blunt that meaningful volume “doesn’t happen much this year.”

The options USDA can reach for fall along a spectrum from doing nothing to a full protocol-based resumption, and the department has used most of them before.

Hold the line

The status-quo option keeps ports closed while USDA prioritizes domestic eradication and uses the leverage of a shut border to extract animal-health commitments from Mexico — a dynamic Rollins has openly credited with making Mexico “better partners.” The cost is continued supply pain in the Southwest and mounting political pressure over beef prices.

Phased, risk-based ports

The template USDA already built opens the westernmost, lowest-risk crossings first — Agua Prieta, Sonora, into Douglas, Arizona — because of their distance from active cases, then adds ports as conditions allow. It is the most likely first move, precisely because it is incremental and defensible.

Regionalization by state of origin

USDA’s prior protocol admitted cattle born and raised in — or treated within — the screwworm-free Mexican states of Sonora and Chihuahua, with reopening of the Laredo and Del Rio ports made contingent on Coahuila and Nuevo León adopting the same regime. Expect USDA to lean harder on regionalization now, both to justify selective imports and to press Mexican states toward compliance. The department has signaled it will seek to regionalize any reciprocal restrictions Mexico imposes as well.

Hardened inspection protocols

The pre-closure system already required what amounted to a triple veterinary inspection — at the Mexican ranch or gathering pen, by Mexican government veterinarians and by APHIS veterinarians at the crossing — with every animal individually identified and run through a squeeze chute, plus a seven-day quarantine for equines. USDA can tighten this further, though APHIS staffing at the ports is itself a bottleneck that limits how fast animals can move even after a green light.

Targeted emergency imports

Texas Agriculture Commissioner Sid Miller has pushed the most aggressive option: limited, controlled feeder-cattle imports as the fastest lever to relieve supply and cool beef prices. It is politically potent but sits in direct tension with the eradication priority, and USDA has been cool to it.

The case for reopening

The pros are real and growing. Reopening restores a feeder-cattle supply that Southwest feedyards were built around; it eases the operating strain that has already driven packing-capacity cuts; it puts downward pressure on retail beef that has run to painful highs; and it throws a lifeline to northern Mexican ranchers whose cattle are stranded. The newest and strongest argument is the “it’s already here” logic — if NWS is now circulating in Texas, an indefinite import ban imposes heavy economic costs while delivering a shrinking marginal biosecurity return. Reopening would also relieve the diplomatic friction that a bidirectional closure has injected into the broader US/Mexico agricultural relationship at a delicate moment for the USMCA review.

The case against

The cons are equally serious. Every imported animal is another potential host, and pulling cattle from regions with active cases could seed new infestations and complicate an eradication campaign that is far from won. The wildlife reservoir — white-tailed deer, exotic game and feral hogs across South Texas that cannot be inspected — already makes containment hard without adding managed-animal risk. USDA’s own history is a warning: the last phased reopening lasted barely a day before a new detection forced a reversal, and a repeat would be costly to credibility. Mexico’s reciprocal closure means a US reopening does not automatically restore two-way trade. And the market itself punishes ambiguity — cattle futures have repeatedly gapped limit-down on nothing more than reopening rumors, so a premature or poorly sequenced move risks a whipsaw that helps no one.

What the closure is doing to the US industry

The supply damage is concrete. Mexican feeder imports — historically around 1.1 to 1.2 million head a year, roughly 3% to 3.5% of national feeder supply but a far larger share of Southwest feedyard throughput — collapsed to about 230,000 head in 2025, running some 795,000 head behind the prior year through last summer. That shortfall is a primary driver of feedlot placements at multi-decade lows against the smallest calf crop since 1941, and it has helped push the feeder-cattle cash index to record territory near $379. Retail has followed: ground beef that ran $5.50 to $5.80 a pound in early 2025 reached roughly $6.70 to $6.80 by January 2026. Processors have retrenched — Tyson’s Lexington, Nebraska, closure alone removed close to 5% of national slaughter capacity — and the Texas Cattle Feeders Association warns that operating under current conditions could mean a billion fewer pounds of beef from the Texas–Oklahoma–New Mexico region this year. The New Mexico crossings that once handled roughly half of all Mexican cattle imports, about 1,500 head a day through Santa Teresa, sit idle, with layoffs rippling through a corridor worth about $1 billion annually.

What it is doing to Mexico

The pain is arguably sharper south of the border, and it is reshaping the industry in ways that will outlast the outbreak. Northern Mexican ranchers, cut off from their primary export market, have been forced to sell into a glutted domestic market at a loss and are carrying a large backlog of animals. But necessity is breeding capacity: cattle that would have crossed north are increasingly being fed and finished inside Mexico, expanding Mexican beef production and, in a notable reversal, lifting US imports of Mexican beef. Analysts including the University of Kentucky’s Kenny Burdine warn that this is not a temporary detour — Mexico is building out finishing and processing capacity that could make it a more formidable competitor even after the border reopens, permanently altering the traditional pattern in which Mexican calves flowed north to US feedyards.

Bottom line

The reopening question is no longer whether USDA can keep screwworm out; it is how the department manages a pest that is already on both sides of the line while limiting further economic bleeding. That points toward a slow, conditional, regionalized reopening — westernmost ports first, tied to sterile-fly capacity and containment benchmarks — rather than a clean policy switch, with any real volume unlikely before 2027. Even a reopening would offer only limited, largely psychological relief, because the binding constraint is a structural North American cattle shortage that Mexican imports never came close to filling. 

Analysts say to watch three things: the trajectory of the Texas case cluster, the ramp of sterile-fly production on both sides of the border, and whether Mexico moves to reopen in parallel. Until those align, expect USDA to keep the border closed, keep the leverage, and keep the market guessing.

USDA set to unwind Biden-era livestock market rules, with nothing yet slotted to replace them

The 2026 regulatory agenda targets the fed cattle price discovery proposal and all three finalized Packers and Stockyards rules — a wholesale reversal that reopens the oldest fight in livestock marketing policy

The Trump administration’s 2026 unified regulatory agenda confirms what the livestock sector has anticipated since Inauguration Day: USDA intends to systematically dismantle the suite of Packers and Stockyards Act (P&S Act) regulations completed in the final stretch of the Biden administration. The agenda, released by the Office of Management and Budget, lays out a sequenced program of withdrawals, delays and rescissions at USDA’s Agricultural Marketing Service (AMS) — and, notably, schedules nothing to replace what is being removed.

What’s on the chopping block. AMS lists July 2026 as the target date for withdrawing the Price Discovery and Competition in Markets for Fed Cattle rulemaking. The Biden administration published that action Oct. 11, 2024 — technically an advance notice of proposed rulemaking (ANPR) rather than a full proposed rule — and extended the comment period through Jan. 10, 2025. The ANPR floated regulatory options aimed at formula pricing in alternative marketing arrangements (AMAs), which now account for the large majority of fed cattle trade, including requirements that base prices in formula contracts be tied to broadly representative benchmarks and that major packers file annual “market fairness” compliance plans with AMS. Withdrawal kills the effort before it ever reached the proposed-rule stage.

The agenda takes a two-track approach to the Poultry Grower Payment Systems and Capital Improvement Systems final rule — the tournament-system regulation former USDA Secretary Tom Vilsack finalized Jan. 14, 2025, in the closing week of the Biden administration, with an original effective date of July 1, 2026. AMS published an action June 1 delaying the effective date until Dec. 31, 2027, and separately lists a July 2026 target for withdrawing the final rule altogether through notice-and-comment rulemaking. The delay is belt-and-suspenders: it keeps the rule from taking legal effect this month while the slower rescission process runs its course.

The administration also plans to rescind the two P&S Act rules that are already in force — the Inclusive Competition and Market Integrity rule, finalized in March 2024, which bars discrimination against and retaliation toward producers who communicate with regulators, join grower associations or assert contractual rights, and the Transparency in Poultry Grower Contracting and Tournaments rule, finalized in November 2023, which requires poultry integrators to disclose key contract terms and tournament information to growers before and during contracts.

Why this is no surprise. All three final rules were pushed across the finish line late in the Biden term over sustained opposition from the National Chicken Council, the Meat Institute and the National Cattlemen’s Beef Association (NCBA), which argued the rules exceeded USDA’s statutory authority and would unravel value-based marketing arrangements. NCC president Harrison Kircher blasted the tournament rule at finalization as a last-gasp piece of an “anti-business regulatory agenda” issued with days left in the administration. The Biden USDA itself blinked on the most ambitious piece of the package — the Fair and Competitive Livestock and Poultry Markets proposed rule, which would have defined “unfair practices” under Section 202(a) — withdrawing it in January 2025 after more than 13,000 comments, citing the complexity of finalizing it. NCBA cheered that withdrawal as a rejection of “Bidenomics” overreach.

There is also clear precedent. In his first term, Trump’s USDA withdrew the Obama-era GIPSA “Farmer Fair Practices” interim final rule — the 2016 attempt to clarify that a producer need not prove industry-wide competitive harm to bring a P&S Act claim — and never finalized a meaningful replacement. The 2026 agenda is, in effect, the second verse of the same song, with the added twist that this time the administration is removing rules that are already operative, not merely shelving proposals.

The procedural and legal road. Rescinding final rules is harder than withdrawing proposals. The Inclusive Competition and Transparency rules are in effect, meaning AMS must run full notice-and-comment rulemaking with a reasoned explanation for the reversal — the Administrative Procedure Act standard courts applied aggressively against both administrations’ regulatory U-turns. Grower advocacy groups and organizations such as Food & Water Watch, which called the move “a slap in the face” to producers, are all but certain to challenge the rescissions, and litigation could stretch the timeline well past the July and October 2026 rulemaking targets. The Dec. 31, 2027, delay on the tournament rule gives the administration cushion if the withdrawal rulemaking bogs down. 

The political crosscurrents. The rollback sits awkwardly alongside the administration’s populist rhetoric on beef prices and packer concentration. The White House has repeatedly leaned on the meatpacking sector over retail beef prices, and the Justice Department and USDA have both signaled scrutiny of packer pricing behavior during the current record cattle market. Removing the price discovery ANPR — the one rulemaking aimed squarely at how packers set base prices for fed cattle — hands ammunition to R-CALF USA and other producer groups that have long argued the shrinking negotiated cash market (in some regions well below 20% of trade) leaves formula prices anchored to an ever-thinner benchmark. Expect renewed pressure for a legislative fix along the lines of Sen. Chuck Grassley’s (R-Iowa) 50/14 mandatory cash-purchase concept and the Cattle Price Discovery and Transparency Act, a debate that has repeatedly split NCBA’s own membership between regions.

Bottom line: The direction of travel is unambiguous: by the end of 2026 the Biden P&S Act framework will likely be gone or mortally wounded. The key open question is whether the administration eventually comes forward with replacement rules of its own — as the first Trump USDA briefly attempted after the GIPSA withdrawal — or leaves the field to case-by-case enforcement and the courts. The 2026 regulatory agenda schedules no replacement action, which tells producers the deregulatory posture is the policy, not a placeholder. That leaves contract poultry growers back under pre-2023 disclosure standards, cattle producers without a regulatory vehicle on formula pricing, and Congress — with a farm bill still pending and a compressed calendar — as the only remaining venue for structural change in livestock markets.

Argentina pork exports surge as sector builds from a small base

A 157% jump in export value through May signals stronger foreign demand and better market diversification, but Argentina’s pork industry remains primarily domestic, with exports still a small share of total production 

Argentina’s pork sector posted a sharp export gain in the first five months of 2026, with pork and byproduct shipments reaching 7,645 tonnes from January through May, according to the Secretariat of Agriculture under the Ministry of Economy. Export revenue climbed to $10.04 million, up 156.8% from the same period last year, while volumes rose 91.2%. The gap between value growth and tonnage growth suggests Argentina is not only shipping more pork, but also benefiting from stronger pricing, a better product mix or improved access to higher-value markets.

China remains an important outlet, with shipments there up 24%, but the broader story is Argentina’s attempt to widen its pork export footprint. The addition of destinations such as the Philippines points to a sector trying to reduce reliance on any single buyer while building credibility in Asian protein markets. That matters because Argentina has long been a more prominent beef exporter than pork exporter, and its pork industry is still working to establish scale, sanitary access and commercial relationships abroad.

The export gain is being supported by a larger domestic production base. Pork output reached 354,588 tonnes during the January-May period, up 11.8% from a year earlier, while slaughter rose 9.7% to 3.72 million head. That indicates the export increase is not simply the result of diverting product away from the domestic market; it is coming alongside broader sector expansion.

Domestic demand also remains firm. Per capita pork consumption reached 19.59 kilograms per inhabitant per year in May, up 8.4% from the same month last year. That is important because exports still represent only a small slice of Argentina’s pork production — roughly 2% of January-May output by volume. In other words, the domestic market remains the anchor, while exports are becoming a more important growth channel.

The main strategic takeaway is that Argentina’s pork sector is gaining momentum, but from a modest export base. Sustained growth will depend on whether producers can keep expanding output, maintain cost competitiveness, secure more sanitary approvals, and compete with larger global pork exporters such as Brazil, the United States and the European Union. For now, the numbers show a sector with improving export traction and a stronger production platform, but not yet one large enough to reshape global pork trade.

US beef exports to China set to rise

China's decision to renew import licenses for US meat plants has yet to revive the beef trade, but the odds of more shipments in the second half of the year are improving, said a report. China's slowing economy and austerity measures have sapped demand for premium cuts of meat. “The US still has a large quota allowance intact, giving it a big advantage, as Australia has run out of quota and Brazil is close to using up its allowance, with Chinese quotas allocated to other major suppliers dwindling,” said the report. “I think there’s still a lot to look forward to when it comes to US beef exports to China in the second half of the year,” Alice Xuan, analyst with Shanghai JC Intelligence, told Bloomberg.

Weekly USDA dairy report

CME GROUP CASH MARKETS (7/2) BUTTER: Grade AA closed at $1.6375. The weekly average for Grade AA is $1.6788 (+0.1318). CHEESE: Barrels closed at $1.4750 and 40# blocks at $1.4325. The weekly average for barrels is $1.4763 (+0.0053) and blocks $1.4288 (+0.0078). NONFAT DRY MILK: Grade A closed at $1.5050. The weekly average for Grade A is $1.5919 (-0.0016). DRY WHEY: Extra grade dry whey closed at $0.6850. The weekly average for dry whey is $0.6850 (+0.0040). 

BUTTER HIGHLIGHTS: Domestic butter demand is steady throughout the country. Demand from international buyers varies from steady to strong. Spot loads of cream were available for the holiday week. Demand from butter manufacturers varies from moderate to lighter. Butter production is stable. Butter makers are building inventories ahead of anticipated heavier demands down the road. A few butter producers are prioritizing unsalted butter production. 80 and 82 percent butterfat butter loads are available. Bulk butter overages range from 3 below to 5 above market across all regions. 

CHEESE HIGHLIGHTS: East region cheese markets remain steady as ample milk supplies support full production schedules. Retail demand for premium brands is stable. Bulk demand is strengthening, with loads moving to Midwest converters to support domestic demand. Northeast export interest continues to bolster overall market firmness. Central region milk output is steady to lighter after recent heat-related declines. Strong Class II demand limits spot milk availability. Cheese plants are running full schedules. Barrel inventories are tight, while curd demand is soft but expected to improve. West region cheese markets remain steady as seasonally lower milk and cream output continues to meet industry needs. Spot demand is moderate, production schedules are stable, and domestic demand ranges from steady to lighter. Export demand is steady, and traders report spot loads remain available. 

FLUID MILK HIGHLIGHTS: Milk volumes are declining seasonally. Extreme temperatures in the Midwest and Northeast are affecting cow comfort and milk component levels. Across the nation, many facilities are undergoing downtime for the holiday, providing ample amounts of milk and cream for the spot market. Class I demand is steady to lighter this week. Class II manufacturers continue to experience strong demand this week, specifically for ice cream and yogurt. Contacts expect a seasonal decrease in demand after the holiday. Class III production is steady this week. Spot milk sales for cheese manufacturers were quiet this week, mostly due to planned downtime. Class III spot prices range from $3.00-under to $0.50-over Class. Class IV production is steady. Many facilities are maintaining busy production schedules to build inventories ahead of the expected demand in the fall. The condensed skim market experienced a large shift this week; condensed skim is readily available and demand dropped. Cream multiples for all Classes range: 1.10 – 1.30 in the East; 1.05 – 1.30 in the Midwest;1.00 – 1.24 in the West. 

DRY PRODUCTS HIGHLIGHTS: Nonfat dry milk prices were mostly lower across all regions and heat levels, with the largest declines in the Central and East at the top of the range and at both ends of the high heat range in the West. Dry buttermilk prices in the Central and East were steady at the bottom of the range but lower at the top, while the West region price series strengthened except for holding firm at the top of the price range. Dry whey prices were largely unchanged, aside from a slight decrease at the bottom of the East region range. Lactose prices moved higher at the top of the mostly range while holding steady elsewhere in the series. Whey protein concentrate (WPC) 34% prices held steady across the price series and remained above year ago levels. Dry whole milk prices eased at both ends of the range and are now more aligned with year ago levels. Acid and rennet casein prices were unchanged. 

INTERNATIONAL DAIRY MARKET NEWS: WEST EUROPE: Prolonged hot and dry weather in Europe is raising concerns about dairy production as heat stress reduces milk yields and places additional strain on livestock. European milk prices continued to weaken in April, marking the tenth consecutive monthly decline as abundant milk supplies and softer dairy commodity markets weighed on farmgate values. Average prices remained well below year-earlier levels, reflecting persistent pressure on producer profitability. 

EAST EUROPE: Record-breaking heat has intensified across Eastern Europe, with countries including Hungary, the Czech Republic, Romania, Serbia, and parts of the western Balkans experiencing exceptionally high temperatures. Rising production costs are increasing financial pressure on Ukraine's dairy sector, prompting some producers to consider reducing herd sizes as input expenses continue to outpace milk returns. 

OCEANIA: AUSTRALIA: Milk production data from Australia for May 2026 was recently released by Dairy Australia. These data show total May 2026 milk production was 654.0 million liters, up 33.7 million liters (5.4 percent) year-over-year (YoY). A group in Australia that forecasts milk prices has raised its opening milk price just before the June 30th deadline, increasing 2026/2027 payments by 15 cents per kilogram of milk solids (kgMS) to $8.80-$9.60/kgMS. 

NEW ZEALAND: Milk production data from New Zealand shows May 2026 output at 1.02 million metric tons, up 3.6 percent YoY with milk solids rising 5.0 percent to 108.7 million kg. Export data for New Zealand was recently released showing the value of milk powder, butter, and cheese exports in May 2026 totaled $2.3 billion, an increase of 6.9 percent compared to May 2025. 

SOUTH AMERICA: Milk production is lighter in South America as seasonal patterns shift into the winter phase. Stakeholders note wet weather for some pastures in South America is also taking a toll on cow comfort. Some stakeholders indicate margins for milk producers are stable, while others note they continue to slowly decline.