Packers were forced to pay up last week to obtain cattle following a light post-holiday trade the previous week.

Market-ready cattle traded $2 to $3 per hundredweight higher in all regions, and dressed sales were quoted $4 higher. The bulk of sales occurred at $126 to $127 per hundredweight, with a few from Northern feedlots at $128. Cattle on a dressed basis sold at $195 to $198 per hundredweight.

Significantly higher prices last week coupled with shrinking feedyard supplies sets up a market tug-of-war this week, with feeders trying to keep the momentum headed higher and packers trying to tamp down bullish price expectations.

Cattle feeders’ ideas for a higher trend gathered limited support from last week’s boxed beef trade, which closed with mixed prices. The Choice boxed beef traded Friday at $191.54, up 81 cents per hundredweight from the previous week. Select boxed beef, however, dropped $1.02 per hundredweight for the week, closing at $180.68 per hundredweight. The Choice-Select spread was $10.86 per hundredweight.

Yearling feeder cattle sold steady to $4 per hundredweight higher. The calf market in the Midwest and Plains regions were steady to up to $5 per hundredweight higher. But deep South and mid-Atlantic calf markets were called weak to $4 lower.

USDA inventory data from earlier this year leaves no doubt about the shrinking supply of stocker and feeder cattle available this fall. The massive drought, however, added another twist to the fall run – calf marketing has been spread out over a longer period of time and the calves coming to town aren’t as pretty as buyers would like them.

“Cow/calf producers in most areas were lucky to maintain their core herd and have nothing to wean calves on and little desire to purchase expensive supplemental proteins,” says USDA Market News reporter Corbitt Wall. “Calves are coming to town right off the cow with little use of knives or needles, although some have a hard-weaned look from the challenges of a hot, dry summer which attracts the eye of some buyers and detracts others that fear additional stress could cause these lightweights to break.”

Wall says operators with the ability to background their own calves will likely keep possession of them until late in the year or early 2013, “when these calves will be as good as yearlings and the CME Feeder Board promises a handsome price.” 

Last week’s auction receipts totaled 235,000 compared to 156,300 last week and 274,000 last year. Direct sales of stocker and feeder cattle totaled 41,200 with video/Internet sales at 127,900. The weekly total was 404,100, compared to 456,300 last year.

Slaughter cows and bulls sold unevenly steady. USDA's Cutter cow carcass cut-out value Friday morning was $166.40, down $1.50 from the previous Friday. Omaha cash corn was 28 cents per bushel lower for the week at $7.65 per bushel.