Cattle futures extended a rally to a record amid signs of shrinking supplies of U.S. beef. Hogs fell.

Beef production will drop 5% to 24.68 billion lbs. (11.2 million metric tons) next year, the USDA projected on Dec. 11. Ranchers culled herds as the worst drought since 1956 eroded crop yields, sending the price of corn, the main ingredient in feed, to a record in August. The U.S. herd as of July 1 was the smallest since at least 1973.

“There’s just optimism out there from the standpoint of the reduced supply,” says Chad Henderson, the president of Prime Agricultural Consultants Inc. in Brookfield, WI.

Wholesale beef increased 0.9% last week, the biggest gain since Nov. 23, USDA data show. Higher prices may start to erode consumer demand as U.S. economic growth slows, Henderson said.

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