LIVESTOCK-U.S. cattle futures end higher on cash market optimism

By Julie Ingwersen

CHICAGO, Sept 28 (Reuters) - U.S. live cattle futures closed firm on Monday, rallying after a sharply lower open as strong packer margins raised expectations for higher cash cattle trade this week, analysts said.

Average beef packer margins rose to $320.18 per head, from $313.25 on Friday, according to livestock marketing advisory service HedgersEdge.com LLC.

"Cash cattle are probably up $1 (per cwt) this week, after being up $1 to $2 last week ... And we start to get into holiday buying again," said Don Roose, president of Iowa-based U.S. Commodities, referring to Thanksgiving and Christmas.

Chicago Mercantile Exchange October live cattle settled up 0.375 cent at 107.950 cents per pound and most-active December ended up 0.250 cent at 111.650 cents.

CME October feeder cattle settled up 0.600 cent at 140.925 cents per pound, and most-active November rose 0.950 to end at 141.100 cents.

Live cattle futures had tumbled at the open as traders responded to bearish feedlot data released by the U.S. Department of Agriculture after Friday's close. The USDA reported the number of U.S. cattle on feed as of Sept. 1 at 11.4 million head, or 104% of a year earlier, topping market estimates for 103.3%.

But futures rallied as traders shifted their focus to expectations for cash cattle and wholesale beef prices to rise.

"Strong domestic demand is giving us a little bit of help," Roose said.

Cattle futures also drew support from a higher close on Wall Street, which some traders associate with improving consumer demand for high-priced cuts of beef.

CME lean hog futures closed mixed, with the nearby October contract supported by firmer wholesale pork prices.

CME October lean hog futures settled up 0.950 cent at 72.700 cents per pound, the while most-active December contract fell 0.400 cent to end at 64.025 cents, staying inside of Friday's trading range.

(Reporting by Julie Ingwersen; Editing by Cynthia Osterman)

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