The second half of July saw markets skid down the other side of the hill, faster than the advance was made. The week ending July 22 suffered sharp losses that entirely reclaimed the early-month gains as pressure mounted from lower fed cattle, a resurging corn market, and a nationwide heat wave that melted demand. Interest was especially light on feeders carrying excess flesh, unweaned calves, or unshed (fescue haired) cattle that withstood the hot temperatures like a popsicle in direct sunlight.

Lighter-weight steer and heifer calves did not see near the spike in prices that the grass yearlings experienced, with the exception of a few reputation ranch strings for fall delivery that were contracted at the extreme high point. The drought sale of calves in the Southwest has kept a lid on the lightweight market, and conditions have worsened to the point that many producers (especially in Texas) have been forced to sell their entire herds. Slaughter Region #6 which includes the driest areas of the Southern Plains killed 15 percent more beef cows through the first half of 2011 than last year. Texas and New Mexico pasture conditions were respectively rated 86 and 91 percent poor to very poor and moisture levels are by far the worst on record.

Fed cattle markets were unexpectedly higher early in July as packers kept chain speeds going to fill forward contracts for boxed product. However, $7 to $8 losses following the Fourth of July holiday week took live prices back under $110 and threatening the $104 mark that most analysts predicted to be the low for the rest of the year. Most feedlots are now incurring significant cash losses on their closeout pens as they are fully into cattle that were purchased at new record-high levels. Oppressive heat and humidity sapped feedlot cattle performance late in the month and many yards were reporting higher than normal death loss.

The July cattle-on-feed report showed feedlot inventories that continue larger than year ago levels at 103.8 percent. Finished cattle marketings during June were encouraging and 5.3 percent larger than the same period last year. Industry analysts continue to struggle in getting a handle on feedlot placements and projected far from the bulls-eye for the third straight month. New cattle going into confinement lots totaled 104.1 percent of 2010, which was nearly 10 percent points higher than the industry’s average guess. June is typically a light month for feeder cattle movement and the continued displacement of lighter calves into facilities has been unprecedented. When rain prayers are answered in the new desert, replacement heifers are sure to be in high demand. The mid-year cattle inventory showed 1 percent less bovines in the US at 100 million head and 5 percent less beef replacement heifers at only 4.2 million.

Corbitt Wall is the officer in charge for the Missouri office of the USDA Livestock Grain Market News.