CHICAGO (Dow Jones)--Chicago Mercantile Exchange hogs settled mostly firm Thursday on short-covering and spreading into December out of October that tripped December buy stops.

Pork bellies posted a steady settlement, while live and feeder cattle closed well into bearish territory.

Lean hogs rose at first, and hovered above the market for the better part of the morning, spirited by generally steady to higher cash hog quotes and December's discount to CME's hog index.

Bouts of short-covering in advance of the weekend, buy stops and the Dow Jones Industrial Average's spike above 9850 provided additional lean hog lift.

Futures, however, eased from highs on selling into upticks fueled by October and December overbought Relative Strength Index conditions. Late-Wednesday's pork cutout setback and skimpy pork packer margins gave some in the pit more reasons to sell into rallies.

And lean hogs responded negatively to the sell-off in the adjoining cattle pits. However, most lean hog contracts landed on solid ground despite U.S. equities that slipped into negative territory. Also, CBOT corn remained lower the remainder of the session.

Another day of volatile trading could be in store Friday as bullish and bearish traders settle their accounts before the weekend.

Mostly steady cash hog values are seen for Friday as packers prep for Saturday's kill that is now estimated at around 170,000 head.

And, market participants await the U.S. government's Thursday evening pork cutout data for clues whether Wednesday's price drop was an aberration or the start of a downtrend.

October hogs ended 27 points lower at 52.17 cents a pound, and December closed 57 points higher at 52.02 cents.

Pork bellies closed steady. Midday Thursday's generally steady fresh belly price underpinned spot-February. However, sporadic lean hog selling and sell stops capped belly futures gains.

February pork bellies closed up 2 points at 86.60 cents. March was unquoted. May closed unchanged at 86.90 cents.


Cattle Complex

CME live cattle closed lower on disappointing cash cattle returns so far this week, sell stops and low-priced CBOT corn.

Live cattle followed the path of least resistance after weakness from Wednesday's pullback carried over into Thursday. Boxed beef price's recent downturn and sell stops eventually dropped October to its lowest level in two weeks. December spiraled to a nine-month low.

But it was cash cattle prices that set the bearish tone for the remainder of the morning.

Cash-basis cattle trading in Nebraska accelerated at $83 to $84 per hundredweight. And an undetermined number of fed cattle in the southern Plains fetched $84 to $84.50.

Packer bids for unsold cattle elsewhere hold at $82 to $83, versus $87 to $88 asking prices.

"A lot of guys who were long, including myself, were wrong about cattle prices the past two weeks," a veteran CME cattle trader said. "The only hope now is that stocks rally sharply or the rest of the cattle out there bring $86."

The USDA's midday Thursday boxed beef item showed choice items down $0.20 per hundredweight, and select cuts were off $0.05.

The latest operating margin index for beef packers was plus $14.45 per head, compared with plus $19.35 the previous day, as calculated by HedgersEdge.com.

Prospective bullish cattle traders were also defensive ahead of the USDA's monthly cattle-on-feed report that will be released at 3 p.m. EDT Friday. The following are analysts' average projections and range of estimates for the upcoming data:

Average Range
of estimates of estimates
On-feed in Sept 98.5 97.0-100.6
Placed in Aug 100.9 96.6-112.0
Marketed in Aug 95.3 93.0-96.5
Position squaring before the weekend and pre-cattle-report jockeying is expected for Friday. And, stubborn bullish traders eagerly await the results of cattle left to sell this week.

October live cattle closed 120 points lower at 85.77 cents a pound, and December finished 130 points lower at 85.35 cents.

Feeder cattle ended down sharply, and front months slumped to three-month lows, on live cattle's fall and sell stops. Longs ditched spot-September ahead of the contract's Sept. 24 expiration.

Some in the pit sold feeder cattle and bought live cattle on spreads.

September feeder cattle settled 162 points lower at 96.65 cents, and October ended down 175 points at 96.70 cents.

-By Theopolis Waters, Dow Jones Newswires; 312-341-5778; theopolis.waters@dowjones.com