* Futures' premiums pressure CME live cattle
    * Feeder cattle slip as corn prices edge higher

    By Theopolis Waters
    CHICAGO, Sept 10 (Reuters) - Chicago Mercantile Exchange hog
futures on Tuesday posted modest losses led by profit-taking
following a recent string of market advances, traders and
analysts said.
    Funds sold the October contract and bought deferred months
in conjunction with the Standard & Poor's Goldman Sachs
Commodity Index (S&PGSCI).
    Funds that follow the S&PGSCI shifted, or rolled, their CME
hog and live cattle October long positions mainly into December.
	

		

			
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Tuesday was the second of five days for the process. 
    October hogs closed down 0.025 cent to 90.850 cents
per lb and December at 87.550 cents, down 0.075 cent.
    Uncertainty about cash hog prices in the near term weighed
on the October contract.
    The U.S. Department of Agriculture on Tuesday morning
reported the average hog price in the eastern Midwest up 9 cents
per hundredweight (cwt) from Monday to $86.46. Cash prices
elsewhere in the Midwest were unavailable.
    Searing heat in the central Midwest slowed down hog weight
gains and curtailed the movement of animals to market, which is
supportive for cash prices.
    "Normally this time of year you're not worrying about the
heat, but the western corn belt has been a blowtorch," U.S.
Commodities analyst Don Roose said.
    From Monday to Tuesday, packers processed 847,000 hogs,
26,000 less than a year ago for the same period, according to
USDA data. 
    The overall seasonal increase in supplies and packers
cutting slaughter rates to offset a brief drop in hog numbers
are negative cash factors.
    Fewer hogs now coupled with the cutback in slaughter put
wholesale pork prices up for a third straight day.
    USDA data showed the wholesale pork price, or cutout,
	

		

			
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Tuesday morning at $96.76 per cwt, up 62 from Monday.   
    Speculative buyers shied away from deferred CME hog
contracts in the belief those trading months are over-valued
based on cash prices expectations for that time frame.
    
    LIVE CATTLE DOWN WITH BEEF PRICES
    Eroding wholesale beef prices and funds shifting their
October long positions into deferred contracts pressured CME
live cattle, analysts and traders said.
    October closed 0.325 cent per lb lower at 125.025
cents, while December ended at 128.650 cents, down 0.075
cent.
    The U.S. government on Tuesday morning showed the wholesale
choice beef price, or cutout, at $193.82 per cwt, down 51 cents
from Monday. Select cuts fell $1.03 to $178.83.
    Sultry conditions in the western Plains curbed cattle weight
gains and dented beef demand.
    Investors are expecting cash cattle to trade steady to
possibly lower with last week's mostly $123 per cwt.
    More cattle for sale, sluggish beef demand and thinning
packer margins could keep a lid on cash returns.
    Estimated margins for U.S. beef packers on Tuesday were a
positive $6.20 per head, compared with a positive $13.25 on
Monday and a positive $9.50 a week ago, according to
HedgersEdge.com.
    Some deferred cattle contracts hovered around 130.00 cents,
which sidelined would-be buyers.
	

		

			
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    Futures built in premiums in anticipation of tighter cattle
supplies at lighter weight as feedlots discontinue use of the
feed additive Zilmax.
    "There are expectations for higher (cash) prices to resume,
but right now we're waiting to see that happen," said Allendale
Inc chief strategist Rich Nelson.
    Weak CME live cattle and firm corn prices, which may reduce
feedlot demand for young cattle, undercut CME feeder cattle.
    September closed down 0.200 cent per lb to 156.400
cents, while October finished at 157.775 cents, 0.275
cent lower. 

 (Editing by Grant McCool)