LIVESTOCK-US live cattle futures mostly higher as corn surges
* Higher deferred live cattle lift feeder cattle * More hogs weaken nearby CME hog contracts By Theopolis Waters CHICAGO, Aug 19 (Reuters) - Chicago Mercantile Exchange deferred live cattle futures rose on Monday in reaction to ideas the surge in corn prices will slow cattle production, traders and analysts said. CME live cattle and hog traders bought deferred months with the view that livestock producers may feed fewer cattle and hogs and fatten them to lighter weights if corn costs continue to climb. Chicago corn futures rose more than 20 cents per bushel in the December, March 2014 and May 2014 contracts on Monday, on worries dry weather the next two weeks in the Midwest will trim corn yields. Also, anticipation of fewer cattle, as ample grazing pastures keep cattle out of feedlots longer, encouraged far-month speculative buyers. Bear spreads, driven by the belief that cash cattle and wholesale beef prices may have topped out in the near term, closed the lightly traded spot August contract lower. "We don't have a problem with last week's higher cash, but we wonder if we're going to see many more weeks of $2 gains like this," said Allendale Inc chief strategist Rich Nelson. Last week, packers in Texas and Kansas paid $123 per hundredweight (cwt) for cash cattle, up $2 from the week before. Nebraska cattle traded at $125, up $1.50 from the previous week. News on Friday that Merck & Co suspended sales of the cattle growth additive Zilmax provided modest support to late-winter and early 2014 CME live cattle contracts. Feedlots will switch from Zilmax to Optaflexx, another growth enhancer, which should result in less animal weight loss than had been initially expected, said David Hales, president of Hales Trading Co. On Monday morning, the U.S. Department of Agriculture reported the wholesale choice beef price at $195.22 per cwt, up 83 cents from Friday. Select cuts were down 72 cents at $185.67. Spot August live cattle ended down 0.250 cent to 123.650 cents per lb. Most-actively traded October closed up 0.150 cent at 128.075 cents and December finished 0.400 cent higher at 130.450 cents. CME feeder cattle prices posted modest gains with support from the live cattle market. Futures also were supported by $1 to $3 per cwt higher cash feeder cattle prices at Monday's Oklahoma City market supported futures. August feeder cattle futures closed at 154.900 cents, up 0.125 cent per lb, while September closed at 157.950 cents, 0.275 cent higher. NEARBY HOGS STEADY-LOWER Nearby CME hogs settled steady to lower on sentiment that cash hog and wholesale pork prices will peak before the Sept. 2, U.S. Labor Day holiday, traders said. USDA on Monday morning reported the average hog price in the western Midwest was up 87 cents at $94.99 per cwt, while the price in the eastern Midwest was down $1.97 to $94.25. A seasonal increase in hog numbers make it unlikely that packers will bid higher for hogs. However, some processors still need hogs to round out this week's production schedule. Grocers are buying pork on an as-needed basis as they stock meat cases to accommodate Labor Day grilling demand. USDA on Monday morning showed the wholesale pork price at $103.28 per cwt, up 37 cents from Friday. Speculative traders bought deferred hog futures contracts in anticipation that higher corn prices will discourage hog farmers from adding to their herds. October hogs ended at 86.475 cents per lb, down 0.250 cent. December finished unchanged at 83.450 cents and February closed down 0.050 cent at 85.425 cents.