LIVESTOCK-Cheaper corn drives US feeder cattle to 6-month high

* Speculative buyers push up live cattle futures
    * CME hogs spike amid futures' discount to cash

    By Theopolis Waters
    CHICAGO, July 15 (Reuters) - Chicago Mercantile Exchange
feeder cattle futures hit a 6-month high Monday led by
CME live cattle market gains and lower-priced corn, said traders
and analysts.
    Favorable crop growing conditions in the U.S. Midwest
pressured CBOT corn. 
    Less-costly corn could reduce cattle feeding costs and
encourage feedlots to buy more younger cattle.
    Corn futures fell Friday after CME feeder cattle closed,
R.J. O'Brien floor manager Jim Brooks said. And there is
anticipation of a higher cash feeder cattle market, he said. August CME feeder cattle closed at 152.650 cents, 2.525 cents per lb higher. September settled at 155.150 cents, up 2.425 cents. LIVE CATTLE RISE AS SPECS BUY Speculative buying with the belief that CME live cattle have bottomed out seasonally lifted futures, according to analysts and traders. Futures gained further after August and October broke through their respective 10-day moving averages, which stirred fund buying. CME live cattle August finished at 122.450 cents, up 0.600 cent per lb. It finished above the 10-day moving average of 122.107 cents. October closed at 126.675 cents, up 0.600 cent and above the 10-day moving average of 126.295 cents. Investors wait for this week's cash cattle sales. Last week, cash cattle in the U.S. Plains lightly traded at $119 to $120 per cwt, which was roughly steady with the week before, feedlot sources said. Beef packers will be leery about actively purchasing cattle given tepid wholesale beef demand and waning margins. USDA on Monday morning reported the wholesale price of choice beef at $191.15 per hundredweight (cwt), down 38 cents from Friday. Select cuts were up 14 cents to $183.81. HOGS UP ON DISCOUNT TO CASH Spot-July CME hogs' modest discount to the exchange's hog
index at 102.98 cents attracted buyers, pushing the contract to a new high before it expired at noon CDT (1700 GMT). CME July hogs settled up 0.200 cent per lb at 102.300 cents. It marked a new contract high of 102.500 cents in after-hours trading. Buyers bought August, the new lead trading month, because of its price discount to July futures before it expired. And spread traders bought August and sold deferred contracts as corn prices weakened. The spread boosted August above the 40-day moving average where fund buyers were waiting. August closed 0.650 cent higher at 95.550 cents and October finished 0.500 cent higher at 84.700 cents. Selling in anticipation of weaker trending cash hog and wholesale pork prices pulled futures from morning tops. "I don't know how much this rally has left without confirmation from continued higher cash and cutout. I'd be surprised if we get that," said independent livestock futures trader Dan Norcini. Pork processors will curtail slaughter rates and reduce cash hog bids to recover lost margins. And beef prices have come down enough to lure shoppers away from pork. USDA data showed the average hog price on Monday morning in the eastern Midwest market down $1.40 per cwt from Friday to $94.61.
The government's Monday morning mandatory wholesale pork price, or cutout, was $101.10 per hundredweight (cwt), which was $1.90 lower than on Friday. (Editing by Chris Reese)

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