U.S. live cattle futures climbed Tuesday on outside market strength and lingering support from a Friday report that sparked supply concerns.

CME live cattle for October delivery closed up 0.875 cents to $1.206 per pound, while October feeder cattle closed up 1.7 cents to $1.39525.

The U.S. Department of Agriculture's Friday report, which showed the number of cattle placed into feedlots was much lower than expected, has fueled gains in live and feeder cattle this week.

But buyer's enthusiasm appeared to wane on Tuesday, at least in the live cattle market, analysts said.

"Even though supplies are tight, you still have to sell it to somebody," says Don Roose, head of U.S. Commodities.

He noted that futures contracts are all at a premium to the cash market, which could limit their upside.

The cattle complex was buoyed Tuesday by optimism for the broader economy, as equities jumped and the dollar fell.

Cattle feeders are asking high prices for their animals this week as futures prices have rallied sharply following the latest monthly cattle on feed report released Friday afternoon.

Cattle are priced from $1.19 to $1.20 or more a pound in the Texas Panhandle, and similar asking levels are reported in Kansas. No bids have been found yet but the initial quotes are expected to emerge by Wednesday. Trading may not develop until Thursday or possibly Friday. Processors appear to have enough animals available for this week's slaughter operations.

Trading last week in Texas, Oklahoma and Kansas occurred at mostly $1.16 a pound, down one cent a pound from the previous week. Sales in Nebraska were mainly from $1.15 to $1.16 a pound live and from $1.82 to $1.84 a pound dressed, also down one cent from the previous week.

The U.S. Department of Agriculture reported choice boxed beef prices at midday Tuesday down 31 cents at $183.86 a hundred pounds and select beef up 51 cents to $169.95 a hundred pounds on 136 total loads.

The latest HedgersEdge packer margin index was minus $7.15 a head, compared with minus $16.50 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.