* Sagging live cattle exert more feeder cattle pressure * Live cattle futures drop on cash sentiment, fund selling * Feb hogs firm, others slip with cattle market losses By Theopolis Waters CHICAGO, Feb 13 (Reuters) - Chicago Mercantile Exchange feeder cattle futures on Wednesday sank to a 5 1/2-month low pressured by sagging live cattle futures and lower prices for younger cattle, said analysts and traders. CME feeder cattle losses spanned eight consecutive sessions, tying a similar losing streak set in October 2009. March ended 1.900 cents per lb lower at 141.350 cents. April closed at 144.950 cents, down 2.200 cents. "Feeders are too expensive compared to live cattle. Feedlots have been losing massive amounts of money and one of the reasons is feeder cattle are too high," said A&A Trading broker Jim Clarkson. Unrelenting drought in the U.S. Plains pushed corn prices to all-time highs last summer and trimmed the cattle herd to the smallest in 61 years, driving up feeder cattle values. Feedyards, which fatten young cattle for sale to packers, in January on average lost $175 per head on cattle compared with $121 losses in December, according to the Denver-based Livestock Marketing Information Center. The price for feeder cattle, young steers weighing roughly 600 to 800 lbs, fell $3 to $4 per cwt on Tuesday at the most-watched Oklahoma City market as feedlot buying interest waned. LIVE CATTLE DROP WITH CASH HOPES CME live cattle finished lower, weighed by more fund liquidation and expectations for steady-to-lower prices for unsold cattle in the cash market, traders and analysts said. Traders also cited mixed rather than higher wholesale beef prices in the midst of a seasonal lull in demand. Spot February settled down 0.550 cent per lb to 125.500 cents. The most-active April ended 0.550 cent lower at 129.400 cents. Prior to a few weeks ago, futures' premiums were justified because of tighter cattle numbers outlook due to back-to-back drought, said EBOTTrading.com senior analyst John Kleist. "Now, people are trying to get rid of that premium because beef demand has fallen apart," he said. So far, a small number of cash-basis cattle in the U.S. Plains traded at $123 per cwt, down $2 from last week, feedlot sources said. Packer bids for remaining cattle stood at $122 to $123 against $125 to $127 asking prices from sellers, they said. Some processors are expected to cut slaughter rates and curtail cash spending to improve their margins and stabilize volatile wholesale beef values. The U.S. Department of Agriculture showed the price for wholesale choice beef on Wednesday morning at $183.57 per cwt, up 12 cents from Tuesday; select cuts slipped 24 cents to $179.06. HedgersEdge.com put the average beef packer margin for Wednesday at a negative $73.95 per head, compared with a negative $78.50 on Tuesday and a negative $62.10 on Feb. 6. FEB HOGS FIRM, OTHERS WEAK Spot February CME hog futures closed up 0.225 cent per lb at 87.475 cents. The spot month drew support from generally steady cash hog prices and its discount to CME's lean hog index at 90.17 cents. CME's cattle market selloff spilled over into remaining hog futures, said traders and analysts. And packers may soon lower cash hog bids and reduce slaughters to realign their margins. Most-active April ended at 85.800 cents, 0.200 cent lower and June closed down 0.100 cent down at 94.150 cents. The average pork packer margin for Wednesday was a negative $9.50 per head, compared with a negative $12.55 on Tuesday and a negative $13.75 on Feb. 6, said HedgersEdge.com. "Packer margins are not all that good right now but pork is very cheap in my opinion," said independent livestock futures trader Dan Norcini. Processors should begin stocking up on hams for Easter demand soon, which could help wholesale pork values, he said.