Feeder cattle and calves sold higher during last week’s holiday-shortened trade. And there’s ample evidence this week could produce the beginning of a seasonal rally that could take prices significantly higher.

The past two holiday weeks saw light offerings of cattle at auction, as many sellers were waiting on the calendar to change before selling their 2012 production. Numbers are expected to increase this week, but it’s a sure bet totals will be well below last year and 5-year averages. The tight supply should boost feeder prices as a dip in corn prices and higher fed cattle prices of late will encourage feedyard buyers to keep their hands in the air.

Describing last week’s trade, USDA Market News reporter Corbitt Wall said, “ the few high-volume auctions in the Northern Plains that were well tested and the sizeable direct country sales in Texas both quoted feeder steers and heifers selling higher. Some auction markets throughout the country that had sufficient numbers of lighter weight calves to entice buyers had undertones that were sharply higher.”

Ideas of higher feeder cattle prices are supported by the fact that fed cattle are roughly $5 per hundredweight higher than last year, and spring CME Live Cattle contracts are nearly $7 per hundredweight over the all-time record high of $130.

America’s ongoing two-year drought, however, will provide a drag on the market, and could prevent what might otherwise produce unprecedented feeder cattle and calf prices. A widespread heavy snow would likely improve the spirits of many ranchers.

Feeder cattle and calves were called even to $1 higher last week with auction receipts totaling 54,500 head. Direct sales of stocker and feeder cattle totaled 26,300, with video/Internet sales of 4,800. The weekly total was 85,600. Two weeks ago the total was 282,700, and last year the total was 267,400.

Slaughter cattle traded $1 higher at $128 per hundredweight in a light test. Some dressed sales occurred at $205 per hundredweight.

Boxed beef prices rose slightly over the past two weeks. Choice boxed beef cut-out values Friday were $194.26 per hundredweight, up $0.79 from last Friday. Select boxed beef traded at $188.22. The Choice/Select spread was $12.04 per hundredweight.

Slaughter cows and bulls were untested over the holidays. USDA's Cutter cow carcass cut-out value Friday morning was $163.10, up $1.14 per hundredweight from the previous Friday. Omaha cash corn on Friday was quoted at $7.17, down 2 cents from the previous week.