Meredith Davis, Reuters  |   January 13, 2012

CHICAGO - U.S. feeder cattle futures rose to a record high for a second straight day on Friday amid tight supplies and another day of steep declines in corn futures, which would slash feed costs.

Most actively traded March feeder cattle futures rose to an all-time high of 152.775 cents per lb, eclipsing Thursday's peak of 152.300 cents and set when Chicago Board of Trade corn futures tumbled the 40-cent daily trading limit.

Benchmark March feeder cattle on Friday closed up 0.575 cent at 152.375 cents, for weekly gain of 1.6 percent, the largest one-week gain in three weeks.

CBOT corn closed lower on Friday amid expected rainfall over the dry crop growing regions of Argentina and spillover pressure from Thursday's USDA January crop and production report, which showed larger-than-expected U.S. corn stockpile.

"It is not surprising that feeders are high - we are running out of feeder type cattle," said Joe Ocrant, president of Oak Investment Group. "Weaker corn also certainly supported stronger feeder cattle," he said.

Benchmark February Chicago Mercantile Exchange live cattle futures firmed on Friday despite uncertainty regarding cash market trade.

The February live cattle contract settled up 1 percent or 1.225 cents per lb at 122.475 cents

HOGS SURGE ON SHORT-COVERING, UPCOMING SEASONAL DEMAND

Hog futures closed higher on short covering and anticipated seasonal strength in pork demand.

Retailers tend to feature bacon in February and ramp up promotions of ham for the Easter holiday in April, analysts said.

"It is pretty common for the hog market and various pork cuts to rally pretty significantly from early January to mid-February since slaughter rates decline early in the year but demand for various pork cuts improve," said Dan Vaught, principal at Vaught Futures Insights based in Arkansas.

"You will see the retailers and processors buying hams pretty aggressively over the next 10 to 12 weeks as the industry gears up for Easter ham features and preliminary buying for the grilling season," Vaught said.

The benchmark February contract closed up 1.97 percent, or 1.650 cents higher at 85.600 cents per lb on Friday. The February contract ended the week about 2 percent higher, the largest weekly grain in three weeks.