The report tracks numbers being fed for slaughter in feedlots with capacity of 1,000 or more head. NASS reported almost 10.5 million head were on feed on July 1, up 3.8 percent from one year ago. Pre-report trade estimates ranged from 1.5 to 4.1 percent higher, so the actual number was nearer the high end of the range. Placements in feedlots during June totaled almost 1.7 million head, slightly over 4 percent more than last year. Average pre-report trade estimates were for a 6.6 percent decline, so placements were much more aggressive than many expected. But drought in the South continued to force lightweight cattle off from pastures and into feedlots. For example, Texas placed over 21 percent more under 700 lb. cattle than last year, and Kansas placed 17 percent more. Marketings of fed cattle in June totaled 2.1 million head which was about 5 1Ž4 percent higher than last year. Higher placements and on feed numbers for much of 2011 are causing more marketings than last year, but at near 5-year averages. The report tallied on feed numbers for all feedlots including those under 1,000 head capacity. Cattle on feed for slaughter in all feedlots totaled 12.2 million head, up only 2 1Ž2 percent from last year. Smaller feedlots are feeding fewer cattle with under 1,000 head feedlots reporting over 4 percent fewer cattle on feed. High feed costs and extremely volatile feed, feeder cattle, and fed cattle prices likely contributed to this decline.

The report confirmed expectations of lower total cattle inventory and beef cow numbers in the U.S. All cattle and calves as of July 1 totaled 100 million head, 1.1 percent below the 101.1 million head last year. The beef cow herd continued to decline with the number of beef cows reported at 31.4 million, also down 1.1 percent from 2010. Higher calf prices that usually bring beef herd expansion are being trumped by the drought in the Southern 1/3 of the U.S. State-by-state numbers are not issued in the July report, but the January report indicated double-digit increases in beef replacement heifers in several Northern states where moisture conditions are excellent. But beef heifers for replacement in the U.S. on July 1 were down 4.5 percent.

Milk cow numbers at 9.2 million were up .6 percent and replacement heifers were up 4 percent signaling ample milk supplies in the coming year.

The feeder cattle supply outside feedlots at 36.8 million was down 950,000 or 2.5 percent from last year, signaling fewer cattle to place in feedlots in coming months. But weather again will still be the wild card. Indications are that historically large numbers of feeder cattle are continuing to be marketed during July in the drought stricken areas, particularly Texas, Oklahoma, and Kansas.

The 2011 calf crop was estimated at 35.5 million down .5 percent from last year. With fewer beef cows and beef replacement heifers and continued cow liquidation in the South a smaller calf crop can be expected again in 2012 as well.

The Markets

The fed cattle market continued seasonally lower for the second week in a row. 5-area fed steers on a liveweight basis averaged $108.52 per hundredweight, down $2.41 for the week and down $6.32 from two weeks ago. Dressed weight prices also declined $4.24 for the week and $10.34 in the past two weeks. Trade volumes were reported at light to moderate. Choice boxed beef prices were also off $2.36/cwt. to average $178.50 for the week, with Select prices off $3.66 to widen the Choice/Select spread to $6.37. Very hot weather in many parts of the country was reported to slow demand. Feeder cattle and calves sold from $4 to $10 lower. Normal seasonally light marketings in the Northern Plains were trumped by very large, drought induced marketings in the South. Higher corn futures prices and declining live cattle futures last week also weighed on feeder cattle prices. Not enough feeder cattle or calves sold in Montana to establish prices. 700 - 800 lb. steers declined $9.48/cwt. in Nebraska and $4.70 in Oklahoma. 500-600 steers declined $16.91 in Nebraska and $4.16 in Oklahoma. Corn prices in Omaha at $7.17 were down 12 cents on Thursday compared to the previous Thursday. But DDGS prices in Nebraska increased $4.10/ton to average $198.70 and WDGS increased 90 cents to average $70.40.