Chicago Mercantile Exchange live cattle on Wednesday reached its highest level in a year, ignited by short-covering and futures' discounts to initial cash prices, traders said.

They said bargain buying briefly sent some deferred live cattle months to fresh highs and up their 3.000-cents per pound daily price limit.

April live cattle , which expires on Friday, closed 2.200 cents per pound higher at 132.025 cents. June ended 2.700 cents higher at 118.525 cents and hit a new high of 118.825 cents.

Animals at Wednesday morning's Fed Cattle Exchange (FCE), on average, brought as much as $131.68 per cwt - up from last week's $128.62 average.

Investors await packer bids and offers from sellers in the U.S. Plains where cattle last week brought $130 to $133 per cwt.

"It's just a massive basis correction," said Archer Financial Services broker Dennis Smith, referring to an adjustment in the "basis" or difference between futures prices and the cash market.

"The board (futures) is feeling too cheap. There's just too big of a discount clear across the board," said Smith.

Packers seem willing to spend more for cattle given tight supplies, a trader said. Grocers and restaurants are gearing up for Mother's Day meal promotions, which should help wholesale beef values, he said.

Wednesday morning's average wholesale beef price was up 42 cents per cwt to $219.43 from Tuesday. Select cuts slipped 24 cents to $206.03, the U.S. Department of Agriculture said.

CME feeder cattle surged to a seven-month high, and some back months spiked to their 4.500-cents price limit, on active live cattle market buying.

Lower corn prices, which typically reduces the cost of feeding cattle, contributed to feeder cattle futures' buying.

April feeder cattle , set to expire on Thursday, ended 1.125 cents per pound higher at 139.850 cents, and made a new high of 139.950 cents. 

Lower Hog Settlement

CME lean hogs gave back some of Tuesday's gains, following a wave of technical selling, said traders.

They said softer wholesale pork values, and uncertainty whether cash prices have bottomed out seasonally, further pressured futures.

May closed 0.550 cent per pound lower at 64.675 cents. Most-actively traded June ended 1.075 cents lower at 70.750 cents.

Plentiful hog supplies, at lower prices, enhanced packer profits, a trader said. But that could change when supplies begin to tighten as they typically do this time of year, he said.