* CME live cattle futures mostly lower * Feeders mostly down, follow live cattle futures * USDA cold storage report to be issued Thursday * USDA monthly cattle-on-feed report due Friday By Theopolis Waters CHICAGO, Aug 21 (Reuters) - Chicago Mercantile Exchange hog futures dropped on Wednesday in response to lower cash hog prices that were pressured by a season increase in supplies, traders and analysts said. The U.S. Department of Agriculture on Wednesday morning reported the average hog price in the most-watched Iowa/Minnesota market slumped $1.94 per hundredweight (cwt) from Tuesday to $91.45. From Monday to Wednesday, packers processed 1.287 million hogs, up 22,000 from last week and 11,000 more than a year ago for the same period, according to USDA. Scheduled pork plant closures during the Sept. 2 U.S. Labor Day holiday will reduce packers' need for hogs. Also, grocers are close to having what the meat they need for their holiday promotions. Government data on Wednesday morning showed the wholesale pork price, or cutout, at $101.75 per cwt, down 71 cents from Tuesday. Fund liquidation developed when CME October and December hogs fell below their respective 10-day moving averages of 86.44 and 83.26 cents. October and December hog futures ended 1.125 cents lower at 85.825 and 82.625 cents per lb, respectively. USDA will release its monthly cold storage report on Thursday at 2 p.m. CDT (1900 GMT), which will include total U.S. pork and beef inventories in July. PRICEY CATTLE UNDER PRESSURE Other than CME August live cattle futures, cattle futures closed lower pressured by ideas their next move is down, traders and analysts said. "This is a market that's going to struggle every time we get above the 130-cents mark in the deferreds," CHS Hedging market analyst Steve Wagner said. The prospect that tight cattle supplies might convince packers to pay at least steady money for cattle lifted the spot-August contract. A few cash cattle bids surfaced in the southern U.S. Plains at $121 per cwt against $125 and higher asking prices from sellers, feedlot sources said. Last week, cash cattle in Texas and Kansas traded at $123 per cwt, and traded in Nebraska at $125 then. Lower wholesale beef prices, as supermarkets have much of what they need for Labor Day features, limited the advance in August futures. The cutout can go higher, but upward momentum tends to fade after reaching the $200 per cwt level, said Wagner. Wednesday morning, the government quoted the wholesale choice beef price, or cutout, at $195.27 per cwt, down 33 cents from Tuesday. Select cuts dropped 66 cents to $184.16. Investors await USDA's monthly cattle-on-feed report on Friday. Analysts expect the report to show the feedlot cattle inventory, as of August 1, was below a year ago for the 12th straight month due to a smaller herd from which to draw cattle. Spot August live cattle ended up 0.300 cent at 124.150 cents per lb. Most-actively traded October closed down 0.175 cent at 127.975 cents and December slipped 0.100 cent to 130.475 cents. CME feeder cattle spot August rose to stay near the exchange's feeder cattle index, which was at 155.25 cents. Weak deferred live cattle contracts and higher corn prices pressured remaining feeder cattle futures. Spot August feeder cattle closed at 155.575 cents, up 0.175 cent per lb. Most-actively traded September closed down 0.550 cent at 157.700 cents and October settled down 0.400 cent at 160.075 cents.