* Feeders aided by live cattle, cash feeder market gains
* Live cattle up with strong beef demand, cash optimism
* Hogs steady-weak; futures’ discount, cash uncertainty
By Theopolis Waters
CHICAGO, Oct 17 (Reuters) - U.S. feeder cattle futures rose for a third straight session on Tuesday, drawing support from tight feeder cattle supplies and gains in live cattle futures.
Traders cited steady-to-higher cash feeder cattle values and weaker corn prices, which lowered the cost for feed.
“You have that reciprocal trade between corn and feeders (futures) and the tighter feeder cattle numbers,” said U.S. Commodities analyst Jason Roose.
And Chicago Mercantile Exchange feeder cattle rose more than 1 percent after October and November futures cleared technical levels, touching off fund buying.
Spot October closed 1.750 cents higher, or 1.21 percent, at 146.100 cents per lb. It broke through the 20 and 40-day moving averages of 145.24 and 145.47 cents.
Most-actively traded November closed at 147.725 cents, up 2.175 cents or 1.49 percent. It too moved beyond the 20 and 40-day moving average at 146.56 and 146.84 cents.
CME live cattle climbed, lifted by strong wholesale beef prices that fueled expectations for steady-to-higher cash cattle values, said analysts and traders.
They said some investors adjusted positions in advance of the U.S. Department of Agriculture’s monthly cattle-on-feed report on Friday.
Analysts expect the data to show September placements fell about 15 percent after feed costs spiked to record high last summer following the worst drought in more than half a century.
Short-covering added to market advances, pushing October futures through the 40-day moving average of 124.81 cents. December broke through the 10 and 20-day moving averages of 126.17 and 126.41 cents, triggering fund buying.
Spot October closed up 1.400 cents per lb, or 1.13 percent, to 125.550 cents. December ended at 126.675 cents, 0.700 cent higher or 0.56 percent.
“Everybody is looking at these tighter cattle numbers and higher wholesale beef prices and anticipating stronger cash,” said Roose.
The wholesale price for choice beef Tuesday morning was up $1.01 per cwt to $194.97 and select cuts rose $1.62 to $180.51 from Monday, said USDA.
Packers have not bid for cattle and sellers have not priced their animals. Cash cattle last week moved at mostly $125 per cwt.
December hog futures finished about steady with Monday’s settlement, underpinned by its discount to recent cash prices while uncertainty about subsequent cash direction weighed on the contract.
“Cash is up in the air right now as packers keep an eye on their margins while hog supplies remain pretty hefty,” a trader said.
Profit taking and spreads undercut February and deep- deferred trading months. Traders reversed bearish spreads with the view premiums in the 2013 contracts might be unwarranted as long as corn prices continue to struggle.
December closed up 0.050 cent per lb, or 0.06 percent, to 78.600 cents. February ended down 0.150 cent, or 0.18 percent, at 84.425 cents.
The estimated pork packer margin for Tuesday was positive $6.20 per head, compared with a positive $4.70 on Monday and positive $2.85 for Oct. 8, according to HedgersEdge.com. (Reporting by Theopolis Waters; Editing by David Gregorio)