USDA's July cattle inventory report said the midyear cattle inventory was down 1.1% compared to July 1, 2010 and predicted the 2011 calf crop would total 35.5 million head, down 0.5% from last year, down for the 16th consecutive year, and the smallest calf crop since 1950. The inventory of feeder cattle was 1.3% lower than a year ago. The number of beef replacement heifers was down 4.5% on July 1 while the number of dairy replacement heifers was up 3.7%. The total number of cows and replacement heifers was down 0.7% on the first of July implying the 2012 calf crop will be smaller than this year.

A severe drought in the southern plains is pushing cattle to market early. January-June cow slaughter in region 6 (Texas, Oklahoma, New Mexico, Arkansas and Louisiana) was up 13.5% from a year ago. USDA's July cattle on feed report said June placements were up 4.1% compared to a year earlier. Placements during the first half of 2011 were up 1.3% despite the 2010 calf crop being 0.7% smaller than the year before. Second half placements are expected to be below the year-earlier level. The cattle on feed report said that only 34.8% of the cattle on feed at the start of July were heifers, the lowest percentage of any July since 2006. This may indicate a coming expansion in the cow herd.

Boxed beef prices were steady this week. Friday morning the choice boxed beef carcass cutout value was $174.81/cwt, down 89 cents from last week. The select carcass cutout was up 57 cents from the previous Friday to $170.87 per hundred pounds of carcass weight.

The 5-area daily weighted average price for slaughter steers sold through Thursday of this week on a live weight basis was $107.55/cwt, down 95 cents from last week. Steers sold on a dressed weight basis this week averaged $174.35/cwt, 4 cents higher than the week before.

This week's cattle slaughter totaled 665,000 head, up 2.2% from the week before and up 1.7% compared to the same week last year. The average steer dressed weight for the week ending July 16 was 846 pounds, up 1 pound from the week before, 14 pounds heavier than for the same week in 2010, and above year-earlier for the 32nd consecutive week.

Cash bids for feeder cattle around the country this week generally ranged from $3 higher to $6/cwt lower than last week, with more markets down than up. Oklahoma City prices this week were $2 lower to $7 higher with price ranges for medium and large frame #1 steers: 400-450# $144-$157.50, 450-500# $147.50-$149, 500-550# $138-$149.50, 550-600# $138-$148, 600-650# $127-$144, 650-700# $119.75-$144, 700-750# $132-$139.75, 750-800# $131.75-$138, 800-900# $127-$136.25 and 900-1000# $122-$126/cwt.

The August fed cattle futures contract ended the week at $112.62/cwt, up $2.07 from last week's close. October ended the week at $117.32/cwt, up $1.92 for the week. The December contract closed at $119.82/cwt.