* Cash cattle prices up $2 from last week * CME feeder cattle gain as corn slide * Lower cash prices weaken hog futures By Theopolis Waters CHICAGO, Aug 16 (Reuters) - Chicago Mercantile Exchange live cattle futures on Friday settled mixed after a choppy session. August live cattle futures closed up 0.200 cent at 123.900 cents per lb and October settled at 127.925 cents, off 0.175 cent. Rising wholesale beef prices and higher cash cattle prices encouraged CME live cattle August futures buyers. The October contract's wide premium compared with August futures stirred profit taking. Cash cattle in Texas and Kansas fetched $123 per hundredweight (cwt), up $2 from last week, feedlot operators said. U.S. Department of Agriculture data on Friday afternoon reported the wholesale price of choice beef, or cutout, up $1.09 cents per cwt from Thursday to $194.39. Select cuts rose 68 to $186.39. The overall beef cutout gained for a sixth straight day, lending support to cash cattle prices. There are fewer cattle around and grocers are buying beef for the Sept. 2 U.S. Labor Day holiday demand, traders said. Distant live cattle futures snapped back from session lows partly on news that U.S. pharmaceutical company Merck & Co will temporarily suspend sales of the cattle growth additive, Zilmax, in the United States and Canada. Merck said it made the decision following concerns about use of the product, which is given to cattle to increase their weight before slaughter. Analysts and traders said discontinuing Zilmax could bring down cattle weight, which means less beef at higher prices. "The market is looking at it and saying that the Zilmax thing won't affect us until much later, even though feedlots can still feed other growth additives," U.S. Commodities analyst Don Roose said. CME feeder cattle drew support from higher deferred-month live cattle futures and fallen corn prices. August feeders closed at 154.775 cents, 0.675 cent per lb higher. September closed up 0.600 cent to 157.675 cents. CASH PRESSURES HOG FUTURES Lower cash hog prices generated profit taking, which put pressure on CME hogs for a second straight session, traders said. CME hog October and December closed 0.575 cent per lb lower at 86.725 cents and 83.450 cents, respectively. The USDA data showed the average hog price at the closely watched Iowa/Minnesota market on Friday afternoon at $94.01 per cwt, $3.01 lower than on Thursday. The industry is coming bigger hog numbers seasonally, which is limiting packer demand for supplies, said Archer Financial Services broker Dennis Smith. Packers are on track to slaughter 2.177 million hogs this week, 158,000 more than last week and up 1,000 head from last year, according to USDA estimates.