LIVESTOCK-Lower cash prices drag down US hog futures

* CME live cattle slide amid cash caution
    * Live cattle losses weigh on feeder futures
    * USDA cold storage report Thursday at 2 p.m.
    * USDA monthly cattle-on-feed report due Friday

    By Theopolis Waters
    CHICAGO, Aug 22 (Reuters) - Chicago Mercantile Exchange hog
futures fell on Thursday in reaction to lower cash hog and pork
prices and a seasonal increase in hog supplies, traders and
analysts said.
    The U.S. Department of Agriculture on Thursday morning
reported the average hog price in the closely watched
Iowa/Minnesota market fell $1.92 per hundredweight (cwt) from
Wednesday to $90.29.
Another USDA report on Thursday reported the wholesale pork price, or cutout, at $99.95 per cwt, down $1.80 from Wednesday. In that report the price of frozen pork bellies, which are made into bacon, dropped $24.83. Pork belly prices often drop in late summer as the bacon-lettuce-tomato season winds down. Heavier hog weights and higher slaughter numbers have increased pork production at a time when the peak demand season is drawing to a close, said independent livestock futures trader Dan Norcini. From Monday to Thursday, packers processed 1.714 million hogs, up 26,000 from last week and 12,000 more than a year earlier, according to USDA. Traders sold deferred hog contracts with the view that lower-priced corn will increase hog production. Fund liquidation developed when CME October and December hogs fell below key moving averages. October hogs closed down 1.425 cents at 84.400 cents per lb. That was below the 40-day moving average of 85.47 cents. December hogs settled down 1.025 cents at 81.600 cents and under the 20- and 40-day moving averages, which converged at 82.29 cents. After the close USDA released its monthly cold storage report. As of July 31, it showed 463.92 million lbs of beef in storage, up slightly from 461.1 million a year ago; 545.26
million lbs of pork, down from 549.62 million a year ago; and 685.1 million lbs of chicken, versus 650.44 million a year ago. CASH CAUTION WEAKENS LIVE CATTLE CME live cattle futures settled lower as the lack of cash cattle sales so far this week discouraged buyers, traders and analysts said. The recent pattern of packers purchasing cattle late on Friday coupled with lower cash hog prices have weighed on both markets in the second half of the week, Global Commodity Analytics & Consulting president Mike Zuzolo said. Cash cattle bids in the southern U.S. Plains stood at $121 per cwt versus $125 and higher asking prices from sellers, feedlot sources said. Last week, cash cattle in Texas and Kansas moved at $123 per cwt, and in Nebraska at $125. Bullish traders believe tight supplies and firm wholesale beef prices will force packers to raise bids for cattle. Market bears contend futures' recent pullback might keep a lid on cash values. Thursday morning, the government quoted the wholesale choice beef price at $195.92 per cwt, up 46 cents from Wednesday. Select cuts jumped 87 cents to $185.31. Investors adjusted positions before USDA's monthly cattle-on-feed report on Friday. Analysts polled by Reuters believe fewer feeder cattle and expensive corn resulted in less U.S. cattle available for
feeding. Spot August live cattle closed 0.800 cent lower at 123.350 cents per lb. Most-actively traded October closed down 0.775 cent to 127.200 cents. CME feeder cattle closed flat to week pressured by live cattle futures' losses. Spot August feeder cattle closed at 155.450 cents, down 0.125 cent per lb. Most-actively traded September ended unchanged at 157.700 cents and October settled down 0.075 cent to 160.000 cents. (Editing by Bob Burgdorfer)

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