LIVESTOCK-Lean hogs climb on falling grain futures

CHICAGO, Jan 20 (Reuters) - CME Group lean hog futures climbed on Wednesday, supported by lower feed-grain futures and expectations the U.S. herd will shrink moving into the spring, traders said.

CME's most-active April lean hogs added 1.65 cents to close at 73.075 cents per pound, while the spot February contract strengthened 1.950 cents to end at 68.425 cents per pound.

Summer month contracts are trading at a significant premium to front-months, with June hog futures 16.075 cents higher than February.

"We're going to have tighter numbers," said Scott Varilek, broker at Kooima & Kaemingk Commodities Inc. "There's some empty slots noted around in the barns currently."

The CME lean hog index for the two days ending January 18 was 2.50 cent below the February contract at 65.92 cents per pound.

Meanwhile, CME live cattle slipped ahead of Friday's monthly Cattle on Feed report from the U.S. Department of Agriculture which is expected to show placements of 1.773 million head, down 3% and larger marketings of 1.845 million head, according to a Reuters survey of analysts.

"We're looking for less numbers on feed, year over year," said Varilek, noting that heavier weights have offset the impact of smaller numbers. "We had so much extra weight on them [last year] that we never really got to see what tighter numbers meant."

CME April live cattle futures ended 0.475 cents lower at 118.875 cents per pound.

Daily cattle slaughter continues to lag behind a year ago, with 120,000 head processed on Wednesday, down 1.6% compared to the same day in 2020.

Boxed beef cutout values strengthened, with select cuts gaining for a fifth consecutive session, adding 84 cents per cwt to $207.28 and choice cuts adding $1.42 to $218.91 per cwt, according to the USDA.

Feeder cattle futures also benefited from softer feed-grain futures, with March feeder cattle gaining 0.725 cent to settle at 137.525 cents. (Reporting by Christopher Walljasper; Editing by Lisa Shumaker and David Gregorio)

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