* Profit taking drags down CME live cattle
* Feeder futures fall as corn prices climb
By Theopolis Waters
CHICAGO, Oct 15 (Reuters) - Chicago Mercantile Exchange hog
futures prices finished more than 1 percent higher on Tuesday as
fund buying rallied the market from early-session lows, traders
and analysts said.
They said nearby hog contracts punched through resistance
levels at key moving averages, drawing the attention of fund
buyers and triggering buy stops.
December hogs closed 1.450 cents per lb higher, up
1.68 percent, at 87.800 cents. It settled above the 20-day and
10-day moving averages of 87.15 cents and 87.03 cents,
February finished 1.150 cents, or 1.3 percent,
higher at 89.800 cents. It ended above the 10-day and 20-day
moving averages of 89.39 cents and 89.17 cents.
Higher-than-expected prices for hogs in local markets
motivated futures buyers and prompted short-covering. Futures'
discount to those cash returns provided more market support.
"From a fundamental standpoint, the cash market sounds like
it's in good shape," R.J. O'Brien hog futures trader Tom
CATTLE SAG ON PROFIT TAKING
CME live cattle futures suffered their biggest
one-day decline, 0.65 percent, in 1-1/2 months on profit taking
led by sentiment that futures are overpriced based on last
week's cash cattle prices.
Last week, cash cattle in Texas and Kansas moved at mostly
$128 per hundredweight (cwt), up $2 from the week before.
Live-basis cattle in Nebraska a week ago traded at $127.50 to
$129, $1.50 to $3 higher than the previous week.
"The $2 push in cattle prices last week was probably a
little surprising. Maybe we did two weeks worth of prices in
one," U.S. Commodities analyst Don Roose said.
October futures are factoring in the possibility of a steady
cash cattle trade this week, and December is at a premium to
cash, he said.
Live cattle October closed 0.950 cent per lb lower
at 128.500 cents while December finished down 0.400 cent
to 132.750 cents.
Improved wholesale beef prices and tight supplies may
underpin cash prices, with packers mindful of their poor
Estimated margins for U.S. beef packers on Tuesday were a
negative $42.75 per head, compared with a negative $37.40 on
Monday and negative $41.95 last week, according to
Data supplied by analytical market-research firm Urner Barry
showed the Tuesday morning wholesale choice beef price, or
cutout, at $193.95 per cwt, up 67 cents from Monday. Select cuts
rose 54 cents to $180.27.
Packers on Tuesday processed an estimated 122,000 head of
cattle, 6,200 fewer than last year, according to Urner Barry.
CME feeder cattle fell about 1 percent on lower live cattle
futures and profit taking after futures' recent spike to new
October feeder cattle ended 1.675 cents per lb
lower, or 1.0 percent, at 165.700 cents. November
settled at 167.500 cents, down 1.900 cents, or 1.12 percent.
Feeder cattle futures also felt pressure from higher corn
prices. Feedlots will be reluctant to buy young cattle if corn
prices trend higher.
Chicago Board of Trade Corn for December delivery
ended up 6-1/2 cents to $4.43-1/2 per bushel on short-covering.
"Cheap corn and the market got overextended," said Linn
Group analyst John Ginzel regarding Tuesday's CME feeder cattle
(editing by Jim Marshall)