KANSAS CITY (Dow Jones)--Chicago Mercantile Exchange lean hog futures Wednesday are expected to open mostly weaker, pressured by a sharp drop in wholesale pork prices Tuesday and flat to lower predictions for cash hog prices.

Live cattle also were expected to maintain a weaker bias, and feeder cattle continue to see seasonal pressure.

The U.S. Department of Agriculture reported the pork cutout value Tuesday down $1.41 per hundredweight, a drop of 2.5% on the day. The biggest decline was in loins, but all cuts were lower. Analysts and brokers said it is taking lower pork prices to move the large amount of pork that is available.

Profit taking, or selling of contracts purchased previously, and some new selling interest also could occur after prices rallied the two previous days. Technical support may be tested as well, such as the 20-day moving average in most-active December hogs. Should futures break through such chart support levels, sell stops, or previously placed orders, could be tripped.

Globex lean hogs are trading 25 to 42 points lower, which sets the lower tone for the beginning of the pit session, analysts said.

Analysts hold mixed opinions for pork belly futures. Belly futures were up the 200-point daily limit Monday and Tuesday, so a firmer opening seems likely, a broker said. If lean hogs open lower though, bellies may soften as well. Trading limits in bellies Wednesday are expanded to 300 points. The daily limit will also be at 300 points for the fourth quarter since a close above 60 cents a pound is assured for Wednesday, the last trading day of the third quarter.


Cattle Complex


Live cattle and feeder cattle futures prices Wednesday were expected to open mixed but trade into the pit-traded session with a weaker tone.

That will be especially true of feeder cattle markets where cash prices continue to see seasonal pressure as cattle come off summer pasture and head for the feedlots. Wheat pasture isn't ready in most cases, so they either have to be sent to a lot and fed hay for a while or go directly into the feedlots.

One trader said he thought larger-than-normal numbers of feeder cattle went into the feedlots in September, which could account for some of the pressure on deferred live cattle contracts. Traders who have a use for the actual cattle could be hedging their feeder cattle investments, and speculators could be selling short, he said.

A lack of bullish news from beef markets was expected to keep any attempts at a rally in live cattle futures under wraps for the day, the analysts said. Prices generally were expected to continue this week's slow leak in value.

Wednesday is the last day of the month and the last day of the quarter, which means at least some of the action could be related to investor book-squaring, a trader said. On such days, the action in the pit can get "goofy."

Cash markets remain quiet with bids and offers separated by a wide margin. Trading was expected to wait until late in the week since packers were thought to have ample inventories.


(To access the daily livestock market data recap report, keyword search for "Livestock Market Fundamental Data Recap")


-By Lester Aldrich, Dow Jones Newswires; 913-322-5179 lester.aldrich@dowjones.com