CHICAGO, Dec 30 (Reuters) – U.S. live cattle futures declined on Wednesday for a second session as surging corn prices signaled rising feed costs and pressured feeder cattle futures, traders said.

LIVE CATTLE

Chicago Mercantile Exchange (CME) February live cattle futures settled down 0.125 cent at 114.450 cents per pound, while CME March feeder cattle tumbled 1.475 cents to close at 139.750 cents per pound.

Feeders fell as benchmark Chicago Board of Trade corn futures touched a 6-1/2 year high at $4.76 a bushel after Argentina, the world’s third-largest corn supplier, moved to restrict exports of the grain.

Higher feed costs cut into feedlots’ profit margins, making feeder cattle less attractive.

However, signs of strength in the cash cattle market and in wholesale beef prices underpinned futures. The choice boxed beef cutout rose 23 cents on Wednesday to $210.53 per cwt, according to the U.S. Agriculture Department. Select cuts rose $4.38 to $199.86 per cwt.

“Boxed beef looks like it has bottomed,” said Don Roose, president of Iowa-based U.S. Commodities.

Some brokers expect meat packers to bid more aggressively for cattle and hogs this week as they resume full operations after interruptions for last week’s Christmas holiday and New Year’s Day on Friday.

“We’ve had two short kill weeks. Next week, the packer is gearing up for a full week. That’s supportive for the cash markets,” Roose said.

The USDA said market-ready cattle traded lightly in the southern Plains cash market at $111 per cwt, up $1 from the bulk of last week’s trade. Some feedlots are hoping for $112 per cwt, Roose said.

Winter storms expected in the southern Plains Thursday and Friday could slow the movement of livestock but traders appeared to have factored that risk into the market already.

Hog futures closed narrowly mixed. CME February lean hogs settled up 0.400 cent at 67.600 cents per pound while the April contract ended unchanged at 71.075 cents and the June contract declined.

The pork carcass cutout value edged up 29 cents on Wednesday to $72.65 per cwt, according to the USDA.

Traders will monitor sales of U.S. pork and beef to China when the USDA releases its next weekly export sales report on Thursday, covering the week to Dec. 24.

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