U.S. live cattle futures kept hold of their bullish momentum Tuesday after last week's late-hour surge in cash cattle prices.

Cattle for February delivery rose 1.15 cents, or 0.9%, to $1.2362 a pound in trading at the Chicago Mercantile Exchange. The CME April contract rose 0.9 cent, or 0.7%, to $1.2730 a pound.

January feeder cattle futures were headed for another record as they rose 0.3%, to $1.5105 a pound. Feeder cattle futures have been soaring to new heights due to a combination of tighter supplies following a drought in the south and easing costs for feed.

Cash cattle markets late Friday seemed to ignore some signs of soft demand as prices generally rose 2 to 3 cents a pound, or stronger than many investors had expected. Participants in the cattle market have been cautious about the endurance of high prices due to weakening wholesale markets and deeply negative profit margin estimates for meat packers.

The U.S. Department of Agriculture Monday reported wholesale choice-grade beef prices down 41 cents per hundredweight at $183.71 and select off 54 cents at $175.07. The total load count of beef sold was 200.

The latest HedgersEdge packer margin index was minus $78.20 per head, compared with minus $75.15 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index. The estimates don't capture lucrative export sales, which have been very strong throughout the past year.

The surge in cattle prices last week is enough "to make one question the overall analysis of the cattle market," said David Hales, publisher of Hales Cattle Letter.

There are signs cattle supplies this year are tightening more quickly than expected. Showlists, or for-sale inventories of animals, are modestly lower this week compared to last week. Analysts have generally been expecting supplies to tighten beginning this coming spring after drought-stricken ranchers spent most of last year liquidating herds from parched pastures.

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The cash cattle markets are expected to be quiet throughout the day following active trading late Friday throughout the Plains and in the western corn belt at higher prices.

Packers purchased about 52,000 head in Nebraska on a negotiated basis Friday afternoon at mostly $1.24 a pound on a live basis and $1.98 a pound dressed, with a few sales at $2.00 a pound. The live sales were up 2 to 3 cents a pound from the previous week and dressed sales steady to up 2 cents.

Trading in Kansas and Texas/western Oklahoma occurred at mostly $1.23 a pound live, up 2 cents from previous week in Texas and 2 to 3 cents higher in Kansas. Sales volumes were estimated at 38,000 in Kansas and around 14,000 in Texas.

No bids have been reported yet and none may be available until Wednesday.