LIVESTOCK-US cattle futures firm on wholesale demand, anticipation of higher cash market prices

By P.J. Huffstutter

CHICAGO, March 31 (Reuters) - Chicago Mercantile Exchange cattle futures extended their rally on Tuesday, as traders anticipated another week of strength in the cash markets as packers shore up supplies ahead of the Easter holiday weekend, market analysts said.

Tight supplies of cattle have sent cash prices soaring, forcing processors to pay more for animals to slaughter, pushing steak and hamburger costs to record levels for consumers.

But packer margins have been staying in the black recently, though margins have tightened a bit.

Meatpackers were earning an estimated $74.85 per head of cattle on Tuesday, compared to $89.45 per head a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.

The pace of cattle slaughter has also remained somewhat steady: Packers slaughtered 108,000 head of cattle on Tuesday, up 107,000 a week ago, according to U.S. Department of Agriculture data.

"With Easter is coming up, you're soon into the prime grilling season," said Don Roose, president of Iowa-based U.S. Commodities. "So right now, packers are trying to buy up what they can."

Strength in the wholesale choice beef market also gave cattle futures a boost.

The USDA reported on Tuesday morning that choice cuts of boxed beef rose $2.34 to $396.44 per hundredweight (cwt), and select cuts rose $3.78 to $394.79 per cwt.

CME June live cattle LCM26 settled 3.075 cents higher at 243.275 cents per pound. CME May feeders FCK26 finished 5.150 cents higher at 366.475 cents per pound.

Meanwhile, CME lean hog futures continued to ease on a flurry of short-term profit taking and technical trading, market analysts said. CME June lean hog futures LHM26 ended 0.825 cent lower, settling at 105.050 cents per pound.