LIVESTOCK-Report positioning extends U.S. hog futures gains

* USDA quarterly hog report set for Friday
* Cash optimism underpins CME live cattle
* Feeder cattle mostly lower as corn rises

By Theopolis Waters
CHICAGO, Sept 25 (Reuters) - Chicago Mercantile Exchange hog
futures on Wednesday gained for a third day in row as
investors adjusted positions ahead of the U.S. Department of
Agriculture quarterly hogs report on Friday, traders said.
Analysts looked for the report to show that while spread of
the deadly Porcine Epidemic Diarrhea virus (PEDv) led to a
near-term shortage of hogs, their numbers are expected to grow

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longer term given cheaper feed.
October futures' discount to the CME's hog index, which was
at 98.05 cents, encouraged buyers.
October hogs finished 1.200 cents per lb higher at
93.700 cents. It hit a new contract high of 93.750 cents in
after-hours trading.
December closed at 88.600 cents, up 0.525 cents
after spiking to a fresh contract high of 89.000 cents.
Uncertainty regarding cash hog prices and weaker wholesale
pork values stirred profit taking that pulled futures from
morning highs, traders said.
USDA's Wednesday morning Midwest direct market hog prices
were unavailable.
Separate U.S. government data showed the wholesale pork
price, or cutout, Wednesday morning at $99.29 per cwt, down 85
cents from Tuesday.
Spread traders sold deep-deferred contracts and bought
nearby months in anticipation of increased hog production as
feed becomes more affordable.

CATTLE UP WITH CASH HOPES
Steady-to-higher cash expectations landed CME live cattle

futures in positive territory for a sixth straight session,
analysts and traders said.
They said investors bought far-month live cattle contracts
in anticipation of tighter supplies during that period.
Profit taking and the belief that futures are too pricey
based on last week's cash cattle returns at times pressured
futures.
October closed up 0.225 cent per lb to 127.550
cents. December finished at 131.275 cents, up 0.050
cent.
Futures' recent win streak may prompt packers to pay up for
supplies, despite their unprofitable margins and lukewarm beef
demand, a trader said.
Cash cattle bids in Texas and Kansas surfaced at $123 per
cwt with no response from sellers, feedlot sources said. Last
week, cash cattle moved at $124 in Texas and Kansas and at $125
in Nebraska.
USDA data on Wednesday morning showed the wholesale choice
beef price, or cutout, at $193.32 per cwt, down 45 cents from

Tuesday. Select cuts gained 32 cents to $177.37.
Estimated margins for U.S. beef packers on Wednesday were a
negative $3.70 per head, compared with a negative $1.40 on
Tuesday and a negative $3.20 a week ago, according to
HedgersEdge.com.
The September feeder cattle contract closed 0.725
cent higher at 158.675 cents, supported by steady to $2 per cwt
higher cash feeder cattle prices in local markets.
Profit taking and firmer corn prices undercut remaining
feeder cattle contracts. Expensive feed can increase input costs
for feedlot operators.
October ended 0.850 cent per lb lower at 162.925
cents while November settled 0.700 cent lower at 164.050
cents.

(Editing by James Dalgleish)