Although total feedyard inventories continue to show year-to-year declines, a summer of lagging steer and heifer slaughter has built a backlog of market-ready cattle. Lackluster beef demand and months of negative margins have kept packers cautions, as they limit slaughter rates and keep a lid on purchase prices. Dairy-cow liquidation hasn’t helped the fed-cattle market either. The Texas Cattle Feeder’s Association notes that since Memorial Day, federally inspected slaughter is down about 4 percent from last year’s total during the same period. Cow slaughter during that time totaled 1,020,600 head – roughly the same as last year. Beef-cows accounted for 535,000 of the total, 14 percent fewer than during the same period in 2008, while dairy cow slaughter, at 485,500, was up 25 percent from last year.

Federally inspected slaughter last week totaled 627,000 head, down about 2 percent from the previous week and 6 percent from the same week last year according to USDA. Fed steer and heifer prices lost about a dollar last week, averaging around $81 per hundredweight compared with $82 the previous week and $99 per hundredweight one year ago. Byproduct values have continued to gain ground since bottoming out below $6 per hundredweight in the early spring, averaging $8.23 last week, up 4.6 percent from the previous week.

With the Choice beef cutout value hovering around $140 per hundredweight, packers continue to lose money. Our Sterling Beef Profit Tracker last week showed packer margins improving, but still $11.86 per head below breakeven. Feeding margins lost about $35 per head last week, but remain positive at $25.17 per head.