Just about the time plenty of producers were wondering whether they'd missed out on lofty cattle prices, last week illustrated the power of tight cattle numbers – at least as long as demand holds up.

Yearling feeder steers and heifers commanded $5-$10 higher at auction last week. Analysts with USDA's Agricultural Marketing Service (AMS) explained Friday that the same price advance was seen in direct trade that occurred with the heaviest volume since the last week of March.

"Calf prices were also higher across the country this past week, but the price trends continue erratic and widespread depending on the local grazing availability," AMS analysts say. "Steer and heifer calves traded unevenly, $2-$10 higher with instances as much as $15 higher; the gains were even posted in the driest areas of Texas and the Southeast where drought has taken hold in certain pockets."

Though positive growing conditions pushed grain prices lower, the jump in cattle prices was due to the bullish June Cattle on Feed report released the previous week (see "Numbers Catch Up To Expectations").

"The light numbers of cattle reportedly placed on feed during May gave Chicago the proof they have been waiting for before reinvesting speculative money in the live- and feeder-cattle futures," AMS analysts say. "Cattlemen's talk of the tight availability of feeders is cheap to an investor who only sees cattle on paper, but a 10.8% drop in placements vs. an average guess of 7.5% invigorated early 2012 CME live-cattle contracts to the record levels posted nearly three months ago. Feeder buyers also turned aggressive this week and pursued cattle at price levels that would have caused them to turn their noses up only a few days earlier."

Whether the chicken or the egg, wholesale beef prices and live cash fed-cattle prices were also lifted higher. Fed cattle sold $3-$4 higher in the Texas Panhandle Friday ($112-$112.50); $4-$8 higher on a dressed basis in Kansas ($178) in a light test. That followed gains in Nebraska and Iowa-Minnesota Thursday. Week to week, Choice boxed-beef cutout values jumped $5.25; prices were $5.24 higher for Select.

Keep in mind, all of this is with increased cattle imports from Mexico.

"Drought conditions in Mexico have increased the incentive for many producers to export cattle to the U.S. The principal forage-producing states of Mexico are facing extreme drought conditions that could endanger animals, particularly if critical rainfall is not received in June and July – the rainy season for major cattle and forage-producing states in Mexico," said analysts in this month's Livestock, Dairy and Poultry Outlook (LDPO). "Given feeder cattle demand in the U.S., these lightweight cattle have largely been placed directly into feedlots during the past few months, which is atypical, as they normally would have grazed forage in the U.S. before being placed."

Monthly cattle imports from Mexico through April were 28% more than year-earlier levels, according to U.S. Census data.

"These higher imports have been maintained in recent weeks, as weekly AMS data reports through the first week of June also show cattle imports from Mexico 27% higher year over year," LDPO analysts explained. “Weather conditions in Mexico in the summer months will determine the degree of seasonal spike in cattle imports this fall.”

All told, analysts with the Livestock Marketing Information Center said earlier this month, "For the balance of 2011, fed-cattle prices are forecast to be 10-45% above 2010, with prices increasing between the third and fourth quarters of this year. Higher fed cattle prices will be reflected in calf and yearling prices that exceed 2010. In the fourth quarter of this year, calf and yearling prices are expected to be up 10% or more compared to last year. Of course, U.S. feed grain yields and forage conditions this summer still present the major unknowns regarding calf prices."

The summary below reflects the week ended June 24 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:

Summary Table
State Volume Steers Heifers
Calf Weight 500-550 lbs. 600-650 lbs. 700-750 lbs. 500-550 lbs. 600-650 lbs. 700-750 lbs.
MO 33,200 $151.40 $143.36 $135.16 $137.54 $130.03 $125.28
OK 31,100 $138.30 $136.71 $135.61 $133.41 $129.28 $126.01
TX 29,400 $129.28 $132.86 $124.90 $122.03 $129.83 $124.14
KY* 14,700 $135.60 $127.41 $118.17 $126.93 $118.47 $117.55
SD 12,400 $168.77 $152.69 $141.05 $150.84 $134.30 $129.12
AR 9,300 $135.92 $131.66 $125.924 $123.54 $119.60 $117.154
AL 8,700 $131.49 $123.87 $115.72 $119.63 $115.41 $106.41
GA*** 6,700 $119-144 $112-130 $110-115 $108-125 $100-119 $100-113
IA 6,700 $159.45 $148.64 $137.78 $143.90 $135.94 $126.71
TN* 5,300 $134.66 $126.70 $121.43 $125.37 $117.16 $110.35
KS 4,400 $152.75 $138.76 $137.46 $147.26 $129.98 $125.88
MS* 4,800 $116-1291 $114-1203 $113-1195 $106-1191 $107-1153 $99-1095
NE 4,600 $152.74 $146.96 $151.12 $148.90 $136.75 $131.95
Carolinas* 4,300 $116-137.25 $113.50-129.25 $103-119 $110-132 $101-120 $96-109
FL* 4,300 $114-132 $110-125 $115-117 $109-126 $106-117 $97-1174
NM 2,600 $136.65 $127.54 $130.32 $124.96 $97.864 $105.897
VA 2,400 $143.07 $129.91 $120.56 $121.62 $129.902 **
MT 1,200 ** ** ** ** $131.65 $109.667
WA 1,100 $127.912 $120.254 ** $125.682 ** **

* 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.