* Hog futures' discount to cash motivates buyers * Traders indifferent to Smithfield deal approval By Theopolis Waters CHICAGO, Sept 24 (Reuters) - Chicago Mercantile Exchange hog futures climbed 3.2 percent Tuesday on speculative buying tied to the spread of the Porcine Epidemic Diarrhea (PEDv) pig virus, traders and analysts said. PEDv, which is deadly to baby pigs, could reduce the number of hogs coming to market in the coming months. "Some people are waking up to how severe this PEDv virus is, which may have been under reported," said Linn Group analyst John Ginzel. He said some traders are buying futures based on initial forecasts for the U.S. Department of Agriculture's quarterly hogs and pigs report. The data will be released on Friday at 2 p.m. CDT (1900 GMT) October hog futures marked a new high for the contract, driven by its discount to CME's hog index, which was at 98.25 cents. At 11:45 a.m. CDT (1645 GMT) October was at 93.000 cents. It was up 2.825 cents and hit a new contract high of 93.150 cents. Anticipation about the impact of the pig virus and undervalued futures overshadowed word of the approved sale of Smithfield Foods Inc to Chinese firm Shuanghui International Holdings Ltd. Smithfield shareholders on Tuesday approved the pork giant's $4.7 billion sale to Shuanghui in what is shaping up as the biggest acquisition of a U.S. company by a Chinese firm. The Smithfield buyout is expected to increase U.S. pork exports to China at some point, but it is too early to tell, said Citigroup futures specialist Art Liming. "I think the futures' discount to cash probably has more to do with today's rally than the Smithfield news. It looks like cash hog prices are going to stay fairly supportive," he said. "The Smithfield news doesn't hurt, but it was fairly cooked into the market that it would be approved," Liming said. USDA's Tuesday morning data reported the average hog price in the most-watched Iowa/Minnesota market at $94.84 per cwt, $2.92 higher than on Friday.