Feeder cattle prices set a record high amid the prospect of "tight supplies", highlighted by the Department of Agriculture in a report forecasting the shrinkage of the American cow herd to a 40-year low.
Feeder cattle for January hit 121.725 cents a pound in Chicago, the highest ever for a near-term contract, before easing to close at 121.35 cents a pound.
The rise comes amid a growing quest for animals by feedlots to cash in on buoyant prices of live cattle – that is, those fattened for slaughter.
Live cattle for February delivery stood just short of 106 cents a pound in afternoon trade in Chicago, less than 1.5 cents short of a two-year high for a nearest-but-one contract set two weeks ago.
Meanwhile, feeder cattle have been relatively hard to come by, with supplies outside feedlots tumbling by 21.5% between July and October, an historically large seasonal decline.
Indeed, feedlots, which raised their cattle intake by 6.2% in November from a year before, are apparently proving willing to take relatively undeveloped animals to fulfil their needs, USDA analyst Rachel Johnson said.
Lightweight feeder cattle have been selling at "very respectable" prices despite the dryness in the Southern Plains, which got winter wheat seedlings off to a poor start, setting back pasture too – a factor which might have been expected to make the feeder cattle market a buyer's one.
Such dynamics suggested that supplies of feed cattle next year "will likely be reduced".
In fact, supplies of feeder cattle should become sufficiently "tight" to "begin to adversely affect [feedlot] placements and subsequent marketings of fed steers and heifers", Ms Johnson said.
The comments came in a report which signalled that a report due next month on America's cattle inventory would show cow numbers beginning 2011 even lower than at the start of this year, itself the lowest figure since at least the early 1970s.
Cow numbers have been weakened by high slaughter rates, lifted in part by the need to replace Australian beef imports, which have been priced out by the strength of the Australian dollar. Australian beef shipments to the US have plunged by 28% year on year.
Slaughter of US dairy cows in October and November ran 4% above levels a year before, with the rate for beef cows up by more than 8%.
"These rates almost ensure that cow inventories on January 1 2011 will be lower than those on January 1 2010," Ms Johnson said.
The overall US cattle herd at the start of this year was, at 93.7m head, its smallest since 1959.