LIVESTOCK-Cattle firm as beef prices turn higher, supplies remain tight

By Karl Plume

CHICAGO, Oct 6 (Reuters) - Chicago Mercantile Exchange cattle futures rose for a second straight session on Monday, supported by technical buying and as beef prices turned higher after a month-long decline, analysts said.

Tight cattle supplies also continued to underpin the market as imports from Mexico remain shuttered due to the northward spread of the flesh-eating screwworm parasite south of the border.

Mexico's agriculture ministry reported another case of screwworm on Monday in Nuevo Leon state, which borders the United States.

The livestock supply worries helped futures extend gains after a recent slide despite negative beef plant margins that had packers reluctant to bid up for cattle.

"Packer margins are in the red from a softer wholesale market and not willing to extend bids. Boxed beef did firm today though, giving the complex support," said Karl Setzer, partner at Consus Ag Consulting.

"A tight replacement supply was additionally supportive for the feeder contracts," he added.

The U.S. Department of Agriculture said the choice boxed beef cutout value rose on Monday to $363.34 per hundredweight, up $1.07 from Friday's two-month low. The select cutout was up $2.59 at $347.97 per cwt.

Beef packer margins, however, remained deeply in the red, with packer losses on Monday estimated at $220.75 per head, down from losses of $187.85 per head a week ago, according to livestock marketing advisory service HedgersEdge.

CME December live cattle LCZ25 rose 2.175 cents to end at 236.675 cents per pound. CME November feeder cattle FCX25 rose 5.375 cents to end at 360.800 cents per pound.

Lean hog futures ended mostly higher on spillover support from rising cattle markets.

CME December hogs LHZ25 closed 0.025 cent lower to end at 87.275 cents per pound, while deferred contracts were higher.