Cattle prices continue to surge higher despite reasonable expectations that the seasonal price peaks should have been achieved a couple weeks back.

The CME Feeder Index closed Friday at $111.68, $3.72 more than a week earlier, higher than $110 for the first time since the summer of 2008. Feeder-cattle futures contracts closed up an average of $1.21 across the first six months.

Both feeder and stocker cattle prices climbed another $3-$6 last week, as much as $10 higher in some spots.

First, it was folks looking for cattle to graze, now it’s buyers searching for anything that might be less pricey than something else.

“Buyers are trying to find a class of feeder/stocker cattle where the competition is not so fierce, but the outstanding demand for all classes resulted in the plainer quality offerings selling even more sharply higher than the trend for the most desirable types,” said analysts with the Agricultural Marketing Service (AMS) Friday. “The combination of green grass, cheaper grains, and reports of $102 fed cattle combusted the feeder cattle market. Prices that seemed expensive a week ago looked cheap this week and it was impossible to tell a high cattle story in a group of market members without it being trumped by a better one: Some thin 3-weight steers in Dalhart, TX brought $154.00-$167.50; Bassett, NE had 6-weight steers up to $138; a load of 611 lbs. heifers at the St. Joe Stockyards sold at $124.25 to a feedlot!”

Packers were so aggressive last week, paying $98-$102, that various reports indicate some feedlots were able to sell this week’s show lists for the same money.

“Several feedlot managers went ahead and sold next week’s showlist as well, which had less days on feed and were much greener than normal,” explain AMS analysts. “But, packers readily absorbed these to fill their needs and to stretch their delivery to help get them to the end of the month.”

Chalk calf prices up to short supplies relative to some of the widest grazing potential in years, corn prices that seem in check and the strength of fed cattle.

Derrell Peel, Oklahoma State University livestock marketing specialist, explained the surprising price rally this way Friday: “Looking back, there’s no doubt the market continues to benefit from the lingering effects of winter weather. Cattle carcass weights are running about 22 lbs. lighter than one year ago. In the most recent week, lighter carcass weights offset two-thirds of a 4.6% increase in slaughter and resulted in only a net 1.7% increase in beef production. The result is feedlots are quite current and light carcass weights are helping them stay that way. That fact and lower feedlot inventories take off some of the normal seasonal pressure on boxed-beef prices going forward.”

As for currentness, some cattle feeders and analysts have remarked in recent weeks this is as current as they’ve ever seen feedlots at any time in the last two decades at least.

“Combine these fed-cattle and beef-supply factors with stronger beef demand and we have higher than expected prices,” Peel explains. “There are several anecdotal indications of stronger retail and restaurant beef sales, bolstered by a recently reported restaurant index that reached the highest level in 27 months in February. The strength of demand trends is hard to anticipate. Up-trending demand could more than offset seasonal supply pressure resulting in continued increases in boxed-beef and fed-cattle prices through April and into May and June. A more likely scenario is stronger beef demand sufficient to plateau beef and cattle markets for a while before the normal June peaks in slaughter and likely recovery in carcass weights catch up with the market and pressure prices seasonally lower.”

Though the current market rally is welcome, some folks are understandably cautious about the current price environment, given the abysmal market conditions for cow-calf producers and feedlot operators the past couple of years.

“All this recent prosperity is starting to make cattlemen nervous and wondering how long it can last, as the beef cattle market does not hold a good track record for maintaining elevated price levels,” explained AMS analysts. “However, most agree that it will not be bearish fundamentals that bring an end to this rally, but rather something aside from basic supply and demand that becomes overly promoted.

“One vulnerable aspect of the cattle market is the heavy influence of speculators currently enjoying the advances on the futures market. These investor groups typically ride a commodity market to the top of the hill and then reverse their position back down the other side. However, tight cattle supplies will get even tighter before rebuilding can be realized and an improving export demand will be hard to pull the rug out from under.”

The summary below reflects the week ended April 9 for Medium and Large 1 – 500- to 550-lb., 600- to 650-lb. (calves), and 700- to 750-lb. feeder heifers and steers (unless otherwise noted). The list is arranged in descending order by auction volume and represents sales reported in the weekly USDA National Feeder and Stocker Cattle Summary:

^* Plus # 2
^** None reported of the same quality at this weight or near weight
^(***) Steers and bulls
^(?) As reported, but questionable
^NDNo Description
¹500-600 lbs.
²550-600 lbs.
³600-700 lbs.
⁴650-700 lbs.
⁵700-800 lbs.
⁶750-800 lbs.
⁷800-850 lbs.
⁸850-900 lbs.