* Feeders spike to 7-1/2-month high as corn falls
* Hog futures' jump on discount to cash, spreads
By Theopolis Waters
CHICAGO, Aug 1 (Reuters) - Chicago Mercantile Exchange live
cattle slumped on Thursday as eroding corn prices stirred
selling that trumped initial speculative buying, traders and
analysts said.
"Usually when you have back-month futures higher than the
front contract, the thing that will hurt the most is if corn
gets cheaper," KIS Futures vice president Lane Broadbent said.
Less-costly corn might prompt livestock producers to feed
more cattle and hogs and nourish them to heavier weight.
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Thursday morning, cash cattle lightly traded in Texas and
Kansas steady with last week's $119 per hundredweight (cwt) and
short of bullish futures traders' expectations.
Market bulls placed bets in anticipation of an uptrend in
cash cattle prices, which typically happens in late July. For
nearly a month, cash prices have hovered around $119 as
wholesale beef demand struggled.
The U.S. Department of Agriculture on Thursday morning
quoted the wholesale price of choice beef at $186.62 per cwt,
down 16 cents from Wednesday. Select cuts were up 28 cents to
$181.93.
Beef demand usually tapers off in hot summer weather as
consumers opt for lighter meals. Grocers are seen stocking up on
beef soon for the Sept. 2 U.S. Labor Day holiday, the last
grilling holiday of the summer.
A Kansas meat packer has recalled 50,100 lbs of ground beef
for possible E.coli contamination, USDA's Food Safety and
Inspection Service said late on Wednesday.
The news had a negligible effect on futures because of the
miniscule amount involved compared to overall beef production
and because no-one had become sick, analysts and traders said.
Jitters about likely deliveries next week exerted more
pressure on CME live cattle August.
Also, August and October futures fell below their respective
40-day moving average support levels of 121.186 and 125.016
cents, which triggered sell stops and fund liquidation.
August live cattle closed down 0.600 cent to 120.850
cents per lb and October at 124.500 cents, or 0.975 cent
lower.
Lower corn prices, which could ease input costs for feedlot
operators, briefly pushed CME feeder cattle to a
7-1/2-month high.
August feeders closed at 153.750 cents, up 0.325
cent per lb, and September at 157.250 cents, or 0.275
cent higher.
HOGS GAIN ON DISCOUNT
Nearby CME hogs' discount to the exchange's index at 100.86
cents encouraged buyers, traders and analysts said.
August closed at 98.425 cents per lb, 0.850 cent
higher, and October closed at 83.900 cents, up 0.575
cent.
They said spread traders sold deferred contracts and bought
nearby CME hogs as corn prices spiraled downward.
Cash hog and wholesale pork prices edged lower, which slowed
futures' advances.
The government's data showed the average hog price Thursday
morning in the eastern Midwest market at $91.13 per
hundredweight, down 73 cents from Wednesday.
Thursday morning's USDA mandatory wholesale pork price
report, or cutout, was $100.78 per cwt, down 16 cents from
Tuesday.
Packers who were closed on Monday for a floater holiday,
with some processors scheduled to be dark on Aug. 5, will make
up the downtimes on Saturday.
Tight hog supplies and retailers buying product for next
month's U.S. Labor Day holiday could convince processors to
raise cash hog bids soon, a trader said.
(Editing by James Dalgleish)
LIVESTOCK-Cheaper corn hits U.S. live cattle futures
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