July was another "good news - bad news" month. Summer beef demand looks fairly good, feed grain costs are still cheap and, even though feedlot profits are scarce, feeder prices are holding strong.
In contrast, however, the drought persists, and extremely hot temperatures are cooking the South. In addition, this is an election year. Anything can happen.
Fed Choice steers in the Amarillo feedlot area moved toward the mid $60 range in July, $2 below a month ago and very close to last year's level. Feeder cattle and calves in the Plains states actually improved with heavier weight animals in the high $80s to mid $90s/cwt., and light calves (400-500 lbs.) in the $105 to $116/cwt. range.
Another Year Of Liquidation The U.S. Department of Agriculture (USDA) Cattle inventory for July 1 shows 106.4 million head on farms and ranches this year, 1% below a year ago. All cows and heifers that have calved totaled 43.2 million head, slightly below the year-earlier figures. Beef cows at 34 million head were down 1% from July 1999, and milk cows were up 1%.
Probably the most significant figure in the report was the lower number of beef replacement heifers. At 4.7 million head, this was 2% under last year and 6% below the two-year-ago level.
The calf crop for 2000 is expected to be 38.9 million head, up slightly from the last two years. Calves born during the first half of the year are estimated at 28.6 million head, also up slightly.
The July cattle-on-feed data continues to record increased feeding activity. Cattle and calves on feed in feedlots with capacities of 1,000 head and more on July 1 reached 10.4 million head. That's a 9% jump over a year ago but down 5% from a month earlier.
Fed cattle marketings in June were 2.2 million head, up just a hair from the comparable period of 1999. Largest percentage gains in marketings were reported in Arizona and Washington. States with the greatest actual increases were Nebraska and Kansas.
Cattle and calf placements into feedlots in June amounted to 1.7 million head. This is a 7% decrease from 1999 and a 6% gain over a month earlier. Cattle and calves placed on feed by weight groups continued to emphasize the lighter weights. Of the June placements, about 60% were under 699 lbs. That compared with only 37% in May and 53% during last January.
Strength For Feeders Will Continue Two reports - "Cattle Feeding" and "Cattle Inventory" - provide independent sets of data that offer important information. The joint statistics tell us that the available monthly cattle on feed figures reported on the 1,000-head-or-more feedlots represents about 84% of total cattle feeding in the U.S. Thus, this cattle feeding data is quite comprehensive.
The inventory figures indicate we're in another year of beef cow liquidation. That, plus the further reduction in heifers being kept for beef cow replacement, suggests at least another year or two of tight feeder supplies.
It may be difficult for fed cattle to record any real strength for the rest of this year. When combined with the higher breakeven costs being registered by feedlots, this could substantially reduce any enthusiasm to replace marketed animals.
Ranchers are likely to continue to do well, however, because of lower available feeder numbers. Some calves may be diverted to stocker operations and pasture growing programs, particularly from drought-affected areas.