Cattle markets – especially lighter stocker and grazing cattle – look set to surge higher, if only it would rain. Stockmen from North Dakota to Texas are experiencing what they already knew – nothing works without water.

Stock ponds are dry, winter grazing is non-existent and hay is too expensive. Still, stocker cattle and yearling prices moved higher last week. Compared to two weeks ago, feeder cattle and calves sold firm to $5 higher on weights over 500 pounds. Lighter weight calves were called erratic and ranged as much as $10 in either direction.

USDA Market News Reporter Corbitt Wall said, “The best demand was shown for cattle suitable for the feedlot, following the holiday shortened week. Major commercial cattle feeders were active bidders as they look to fill available pen space before the end of the year.”

The drought, however, continues to keep the cattle markets in check. “Current stocker and replacement cattle purchases at every level (from a 300 lb calf to an older bred cow) probably have the widest range of expected return than any time in history,” Wall said. “Even some moderate measurements of moisture should cause prices to soar past record levels, while continued dry conditions will limit spring grazing prospects and cause further sell-off of breeding stock.”

Last week’s auction receipts totaled 252,400, compared to 102,000 the previous week and 271,700 last year. Direct sales of stocker and feeder cattle totaled 50,200 with video/Internet sales at 11,000. The weekly total was 313,600, compared to 324,500 last year.

Packer demand for fed cattle was called modest at best last week, and the best prices were found early in the week at $128 per hundredweight. By Friday cash bids were $125, $2 lower than the previous week.

Boxed beef prices traded lower for the week. Choice boxed beef traded Friday at $195.05 per hundredweight, $1.28 lower than the previous Friday. Select boxed beef gained $0.03 for the week to $174.20 per hundredweight. The Choice-Select spread finished the week at $20.83 per hundredweight, a decline of $1.33 from the previous week.

Slaughter cows sold $1 to $3 higher. Slaughter bulls sold firm to $2 per hundredweight higher. USDA's Cutter cow carcass cut-out value Friday morning was $161.49, up 44 cents from the previous Friday. Omaha cash corn on Friday was quoted at $7.80, up 9 cents from the previous week.