Record heat pushes major cattle herds into sell-outs -

Cattle performance faltered as feed consumption plummeted and pasture conditions eroded with very little weight-gain recorded through the month and body conditions of breeding stock dropping, especially in the Southwest. Drought sell-outs by Texas cattle ranchers continue as producers have simply run out of options with both forage and hay supplies completely depleted. Reported auction receipts in Texas during June and July were 35 percent heavier than a year ago after most cattlemen had already deeply culled their herds. Unfortunately, this volume data and valuable market information will not be available after Aug. 31 as state budget cuts to the Texas Department of Agriculture have eliminated their Federal-State Market News Program.

The market for feedlot replacements saw a post-holiday spark immediately following July 4, which actually set new record highs including the CME Feeder Cattle Index (based on a 750-pound steer) that peaked out at 139.44. However, the hot weather quickly reclaimed these advances and more as demand turned especially light for cattle carrying considerable flesh, unweaned calves, or long-haired cattle that failed to shed-off as these types melted like popsicles. The yearling steer and heifer market for the remainder of July and into early August was unevenly steady with tight supplies and global financial crisis pulling feeder markets in both directions.

Lighter-weight calf markets through the middle of the summer were very uneven depending on the geographical location of the sales. The bulk of the calves in the drought stricken Southwest have already been sold at weights several hundred pounds lighter than the normal marketing period in late fall. Droves of pee-wee calves weighing from 200 to 400 pounds have been pulled from their hungry mothers and moved to feedlots or greener pastures farther north.

Feed shortages are ruling the movement and backgrounding of calves as the hay situation through the mid-section of the United States has become colossal. Hay brokers from Texas, Oklahoma, and Kansas are beating the bushes as much as 1,000 miles away in search of any quality of bales to fill needs in the parched areas. Feedlots and dairies have seen their hay costs inflate by more than one-third in the last few weeks with price no longer a bargaining tool and simple availability the only variable. A convoy of trucks can be seen heading to the drought areas with even egg-shaped and half rotten round bales from seasons past plucked from hedge-rows in the Midwest.

In spite of the challenges facing cattle producers across our nation, the near future of profitability in the industry looks very rosy. The fall feeder cattle market outlook that normally falls under heavy pressure from the large volume of spring-born calves plus the movement of grass yearlings from western grazing regions is bright this year as much of the fall-run is already over. Feedlots are prepared for a large influx of new arrivals during the fall and the finished cattle market is forecasted to post new all-time highs (over 125.00) when fall purchases make the showlists. The late summer fed cattle market found bottom-side support at 107.00 in mid-July and is rebounding even faster than predictions. Handsome cattle markets through the first half of 2011 were very impressive, but if fundamental indicators hold true “we ain’t seen nothin’ yet.”