(Prices reflect settlements at 1:03 p.m. CST)
* Feeder cattle ends up sharply
* Firmer lean hog market close
By Theopolis Waters
CHICAGO, Jan 26 (Reuters) - Chicago Mercantile Exchange live cattle futures finished higher on Tuesday, with strength from the U.S. stock market rally that was partly fueled by the rebound in crude oil prices, traders said.
February live cattle closed up 1.600 cents per lb to 133.025 cents, and April ended 1.175 cents higher at 133.400.
Investors simultaneously sold deferred months and bought the February contract with the view that it was undervalued in advance of expectations for cash prices later in the week.
Market-ready, or cash, cattle in parts of the U.S. Plains may trade nearly in line with last week given 17,500 fewer animals for sale and the day's mixed-rather-than-lower beef cutout value.
But some packers might push back against raising cash bids while trying to conserve their slimmer profit margins.
Last week, cash cattle moved at $130 to $135 per cwt.
Tuesday morning's wholesale choice beef price, or cutout, jumped 81 cents per cwt from Monday to $224.60. Select cuts fell $1.17 to $217.77, the U.S. Department of Agriculture said.
The average beef packer margin for Tuesday was $19.85 per head, down from $69.30 for Monday, as calculated by HedgersEdge.com.
Strong cash feeder cattle prices and CME live cattle market buying lifted the exchange's feeder cattle contracts. January , which will expire on Thursday, closed up 0.875 cent per lb to 161.100.
Firm cash and wholesale pork values lifted CME lean hogs, traders said.
Spot February finished 0.800 cent per lb higher at 64.325 cents, and April ended up 0.825 cent to 69.600 cents.
Cash hogs in the Midwest Tuesday morning sold steady to up 50 cents per lb, with packers buying for the balance of this week amid a seasonal slowdown in overall supplies, regional dealers said.
"A few packers are working with a bit higher inventory, but others are not flush with pigs," an Iowa dealer said.
The morning wholesale pork price on Tuesday climbed $1.18 per cwt from Monday to $76.76, helped by more than $3 higher values for ribs and picnic shoulders, the USDA said.
Some retailers may be buying pork ahead of expectations of fewer hogs this spring, based on the government's most recent quarterly hog report, a trader said. (Reporting by Theopolis Waters; Editing by Lisa Shumaker)