* Cash sentiment underpins CME live cattle
    * Feeders follow firm live cattle market

    By Theopolis Waters
    CHICAGO, Aug 29 (Reuters) - Chicago Mercantile Exchange hog
futures climbed Thursday, driven by fund buying and
short-covering on the eve of the last trading day of the month,
traders and analysts said.
    Investors also adjusted positions ahead of the  U.S. Sept. 2
Labor Day holiday, traders said.
    CME hogs gained almost 1.4 percent, their biggest
one-day percentage increase since 2.1 percent on July 23.
    October futures' discount to CME's hog index, which was at
95.14 cents, generated more buying interest.
	

		

			
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    October hogs finished 1.275 cents higher at 87.325
cents per lb while December settled 1.150 cents higher 
at 84.300 cents.  
    Hog futures gained traction despite ambivalence about cash
hog and wholesale pork prices in the near term.
    "The discount is being cut down to size significantly, which
is going to make that moot since we are talking about the price
of hogs in October, not late August," independent livestock
futures trader Dan Norcini said.
    The U.S. Department of Agriculture on Thursday morning
quoted the average hog price in the western Midwest up 94 cents
per hundredweight (cwt) at $88.84 cents, but it quoted prices
$1.41 lower at $86.39 in the eastern Midwest region.
    Thursday morning's government data showed the wholesale pork
price, or cutout, at $96.97 per cwt, up 77 cents from Tuesday.
The cutout was largely driven by the $5.55 jump in ham prices.
    Packers are pressuring cash hog bids amid a seasonal bump in
supplies. Processors have all the hogs they need before shutting
down plants for Monday's holiday.
    And supermarkets are reluctant to book big orders of pork
until they determine how product moved over the three-day
holiday weekend, the last grilling holiday of the summer.
   
    CASH IDEAS SUPPORT LIVE CATTLE
	

		

			
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    Short-covering and anticipation of cash trading at a minimum
of steady with last week underpinned CME live cattle, analysts
and traders said.
    Cash cattle bids in Texas and Kansas inched up to $122 per
cwt from $121 against $125 and higher asking prices, feedlot
sources said.
    Last week, cash cattle traded mostly $123 per cwt in Texas
and Kansas, and $125 in Nebraska.
    Packers who raised cash bids in the southern Plains
suggested they may need cattle, even though processors are
buying supplies for the holiday-shortened week.
    Packers will be careful about how much they spend for cattle
 given more of them are available for sale this week and beef
appeared to have waned.
    USDA Thursday morning reported the wholesale choice beef
price, or cutout, at $195.88 per cwt, down 40 cents from
Wednesday. Select cuts dropped 98 cents to $183.42.
    Spot August live cattle, which will expire on Aug.
30, ended up 0.250 cent to 123.550 cents per lb. Most-actively
traded October closed up 0.050 cent to 126.975 cents.
    CME feeder cattle followed the firm live cattle market.
    Spot August feeders expired from trading at noon CDT
(1700 GMT), settling up 0.325 cents per lb at 155.050 cents.
That was nearly in line with CME's feeder cattle index at 154.76
cents.
    September, the new lead month, finished 0.300 cent
	

		

			
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higher at 156.225 cents and October at 158.000 cents,
0.375 cent higher.

 (editing by Jim Marshall)