LIVESTOCK-CME feeder cattle extend gains on US supply worries

By Tom Polansek

CHICAGO, Sept 23 (Reuters) - Chicago Mercantile Exchange feeder cattle futures extended gains on Tuesday on concerns over tightening U.S. supplies, analysts said.

Feeder cattle rose again after the U.S. Department of Agriculture said on Sunday that Mexico had confirmed a case of New World screwworm (NWS), a damaging livestock pest, less than 70 miles from the U.S. border.

The agency has barred Mexican livestock from entering the U.S. in a bid to keep out screwworm, and the latest detection fueled expectations among traders that the ban will remain in place.

"It's been a very strong start to the week across the cattle markets, especially feeders following the latest NWS announcement Sunday night," AgMarket.net said in a note.

CME October feeder cattle FCV25 ended up 0.775 cent at 362.125 cents per pound and hit the highest level in three weeks. On Monday, the contract surged 7.25 cents.

CME December live cattle LCZ25 ended down 1.475 cents at 238.750 cents per pound. The contract eased after jumping 4.5 cents on Monday.

U.S. cattle inventories declined to their lowest level in decades after a years-long drought reduced pasture lands available for grazing and raised feeding costs. The halt to imports of cattle from Mexico further tightened supplies.

The USDA on Friday reported the number of cattle in U.S. feedlots as of September 1 at 11.1 million head, down 1.05% from a year earlier. Analysts surveyed by Reuters ahead of the report on average had expected a slightly smaller drop of 0.9%.

In the pork market, CME October lean hogs LHV25 settled up 1.725 cents at 100.525 cents per pound and set a contract high. Solid bids in the cash market have helped support futures, a trader said.

Analysts expect a quarterly USDA report on Thursday will show the U.S. hog herd on September 1 was likely about the same size as it was a year earlier, according to a Reuters poll.