J.D. Sartwelle, Jr., President of Port City,  for many years has written his "Over My Shoulder" articles that are a "marketman" in cow-calf country perspective on why our markets of the previously ended month behaved as they did.  The article is published in several livestock trade magazines and in many country newspapers across Texas.

July  Over My Shoulder

             July was an event filled month that came in hot and dry, left mostly hot and dry and at end of month was in the middle of the  dreaded dog days of summer.  July saw the first hurricane of the year make landfall, saw market changes, drops in crude oil prices and fuel, a bickering, do nothing congress at work at their best, interim rules finally put out by USDA relative COOL, more favorable crop forecasts,  trade talk breakdowns, and increasing exports.  July had lots to offer.
         The month started with most folks under the gun, needing critical moisture; some got a little bit and some got more than enough when the first hurricane of the year hit the Rio Grande Valley and beyond.  During July parts of the Midwest dried out while showers were spotted in Texas but moved east with more developed systems and put more needed moisture over the southeast portions of the country.  As it is during most Julys, it hard to get too much moisture and with what folks received, more would have been better for the most part.  In many areas of the country moisture was there to grow a little grass or make it green, but didn’t help hay prospects very much.
         During the month, amid talk of drilling, economic slow downs, less driving, etc, crude oil prices peaked and started a downward path to continue to month’s end.  Fuel prices backed off of peaks and began a decent; not that prices became bearable, but down is much better than continuing to rise.  In the ag markets, corn futures prices backed off with reports of better weather conditions in the mid west that indicated increased yield prospects coupled with  a slowdown in demand from livestock feeders and ethanol producers.
In the meat complex, escalating carcass cutout values pulled live cattle prices up then down during the month while the good news there was increased export trade and fewer cattle on feed.  Speaking of exports, with more shipping containers finally available, beef exports during June approached pre Dec 03-BSE levels and saw the pork complex do the same thing.  During July, the first bone-in product hit grocery shelves in Korea.  On a sour note, the U.S. trade negotiator saw a complete break down and cessation of talk during the World Trade Organization’s Doha Round in Geneva; not good for agriculture.
On the political front, most of what all heard was on the presidential race, and the do nothing congress that made a mockery of their last day at work before taking off on their summer break.  They also began debate on the Prevention of Equine Cruelty Act which, if enacted, would criminalize horse processing.  Out of Washington, the USDA finally published their COOL regulations that will call for industry comment before implementation at the end of September.  And out of the state of Washington, one more federal judge made law with the help of environmental groups, when the court disallowed USDA to open, according to their rules, CRP lands for haying and grazing.  The court later ruled that some CRP acreage could be released.
         Meanwhile, in the feedyards at first of month, bolstered by short numbers on feed, far out futures rose, carcass cutout values took quantum leaps and packers and feeders alike felt good until prices couldn’t be sustained on the retail end.  After reaching near record highs, carcass values began to drop and fed prices followed a similar path bringing down the far out futures.  All of this while corn prices were backing off of highs.  At month’s end, feeders were still losing substantially while packers were still experiencing substantial per head profits.  Sooner or later that scenario will change.
         Meanwhile, at the markets, despite dry conditions and or wet conditions at end of month, market runs were seasonal with no buildup in numbers.  Some say, dry conditions should be pulling in more cattle; some are saying they simply aren’t there.  Slaughter cows and bulls fared well during the month as supplies were limited and competition from exports was near all time minimums as consumers made switches to more ground beef product, perhaps as a way to cope with high fuel prices.  The feeder trade remained in strong hands and calves at the markets met a good demand.  Calf prices were steady-strong during the month and while not as high as last year, were still in stronger hands that many thought that they could be.  The mid-year inventory report showed no surprises as the industry seems to be in a treading the water mode.
         The pork complex has been experiencing better times and even as summer time kill levels remain large, prices have climbed back into the high fifties.  They too have seen increased tonnage going into the export trade.
         August still promises to be hot with no real changes in weather in the forecasts.  We’ll still need moisture and slightly cooler weather if we are still to make much needed hay.  We’ve caught up before in September but its hard to do.  In the meantime, lots of folks will make dry weather decisions as to how long to leave calves on cows, what they’ll feed, or how many cows they will eliminate to ease wintering costs.  It could all be moot, if we got the right moisture from what ever direction it came.  Hurry up and finish up dog days.
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