In the past six months, the cattle industry was also responding to feed price signals. Last spring, the early planting of corn and optimism regarding yields dropped the U.S. average price of corn below $3.50 per bushel. Cattle feeders responded quickly by adding more cattle to feedlots. In May and June, placements were up 20 percent from the same months in 2009, he said.

"For the more extended period from May through August, placements averaged 9 percent higher. The recent sharp increases in corn and other feed ingredient prices are likely to send this fall's placements well below levels of a year ago when U.S. corn prices averaged $3.62 per bushel for the final quarter of 2009," Hurt said.

Expanding trade opportunities are important to cattle markets this year. The USDA expects beef exports to expand by 18 percent this year, with imports falling by 5 percent. The impact of more exports and less imports represents nearly 500 million pounds of beef that will not be available in the U.S. compared to last year. That represents almost 2 percent of domestic production and enhances finished cattle prices by $2 to $3 per hundredweight, he said.

"It is increasingly encouraging that Asian markets are leading the export volume increases so far this year. Purchases from South Korea are up 130 percent from last year with Japanese purchases up 21 percent. China is back in the market as well with an increase of 50 percent in beef purchases," he said.

Gaining back export markets after the first U.S. BSE cow was announced in late 2003 has been a long process, he noted.

"Even after this year's large gain in export volume, annual exports will still be only 91 percent of 2003 export tonnage," he said.

Smaller beef supplies will continue to support high finished cattle prices for the rest of 2010 and all of 2011. Per capita beef supplies in the U.S. will be down about 3 percent this year and an additional 1 to 2 percent in 2011, he said.