Cattle for February delivery rose 0.97 cent, or 0.8%, to $1.2420 a pound in trading at the Chicago Mercantile Exchange. April cattle traded higher by 1.15 cent, or 0.9%, to $1.2780 a pound.

January feeder cattle finished at another all-time record, up 0.5% to $1.5170 a pound. Feeder cattle contracts have been soaring in value since early January due to a combination of easing feed costs and signs that supplies of cattle are shrinking more quickly than expected.

Futures were pushed upward as traders prepared for Friday's cattle-on-feed report from the U.S. Department of Agriculture, which is expected to forecast sharply tighter year-over-year supplies of cattle placed on feedlots, where they're fattened before slaughter. The monthly report has held some surprises in recent months.

Some bearish investors appeared to bid up futures in order to cover short positions, participants said. Last week's unexpectedly strong cash cattle markets surprised investors who were banking on lower demand from beef processors.

"People being forced to cover short positions is part of the upside we have seen," said Tom Leffler, president of Leffler Commodities.

Cattle futures also benefited from a modest rise in bids in cash markets--potential sign that demand from packers remains firm, despite weak wholesale beef prices and negative profit margin estimates for processors.

The U.S. Department of Agriculture reported midday choice boxed beef prices down 80 cents at $181.73 and select up 50 cents to $174.96 a hundred pounds. Total sales were reported at 169 loads.

The latest HedgersEdge packer margin index was minus $93.55 per head, compared with minus $89.05 the previous day. The latest figure was the lowest since Dec. 12 when the index hit a record low at minus $112.10 per head. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.

Beef processors in cash markets bumped their bids up to $1.21 a pound in Texas, western Oklahoma and Kansas from $1.20 a pound Wednesday. Sellers showed no interest in inking deals at that level since last week's sales were at mostly $1.23 a pound and were asking $1.25 to $1.26 a pound for their cattle this week.

Bids at $1.21 a pound live and $1.96 a pound dressed were reported in Nebraska. Asking prices were mostly around $1.27 a pound live and $2.02 or more dressed. Sales there last week were at mostly $1.24 a pound live and $1.98 a pound dressed with some up to $2.00.

HOGS COMPLEX

Lean hog futures met an abrupt end to a multi-day rally as traders took profits and concerns about demand swelled.

February hog futures fell 0.87 cent, or 1%, to 85.40 cents a pound in trading at the Chicago Mercantile Exchange. CME April hog futures closed down 0.42 cent, or 0.5%, to 87.50 cents a pound.