The New World screwworm, a flesh-eating parasite, has been detected in livestock in Texas, prompting a surge in stock prices for Zoetis and Elanco Animal Health. On Thursday, Zoetis shares rose nearly 4%, while Elanco gained 2%. The options market for Zoetis became particularly active, with trading volumes reaching almost 20 times the daily average, indicating strong bullish sentiment.
Notably, Zoetis had received conditional FDA approval for a treatment last year, and an emergency use authorization was granted recently, enhancing its market position. Scott Gottlieb, a former FDA commissioner, warned that if the parasite spreads beyond livestock to wildlife, controlling it could become significantly more challenging.
While cattle futures have remained stable, up over 1% amid a broader rally, concerns about potential disruptions to the beef supply chain could lead to market volatility, especially given the American preference for beef. Ben Rand, a broker, emphasized that the approval of a treatment could help U.S. producers manage the situation effectively