Chicago Mercantile Exchange live cattle futures closed sharply higher on Tuesday, ignited by bargain buying after burdensome supplies recently sank the contract to eight-month lows, said traders.

"Everybody was just overly bearish and we had lots of long liquidation by funds pushing the market down. So we've got to where there wasn't any more sellers," said Hales Cattle Letter author David Hales.

The October contract cracked the 200-day moving average of 107.247 cents, which triggered technical buying. Some investors bought that month and sold August before it expires from trading on Aug. 31.

August ended 1.000 cent per pound higher at 110.050 cents. October closed 2.450 cents higher at 109.050 cents.

Before Tuesday's session, bullish investors were drawn to futures that were underpriced, or discount, to last week's cash or market-ready cattle in the U.S. Plains that fetched $114 to $116 per cwt.

So far this week packer bids for cash cattle were at $110 per cwt with sellers asking $115 for their animals, said feedlot sources.

Processors will resist bidding up supplies given 12,000 more animals for sale than last week and as wholesale beef demand struggles to carve out a seasonal bottom, said traders and analysts.

They await Wednesday's Fed Cattle Exchange (FCE) sale of 1,184 animals to set the tone for the overall cash trade in the Plains this week. Cattle at the FCE last week fetched $114 to $115.50 per cwt.

CME feeder cattle gained for a third consecutive session driven by technical buying, lower corn prices and live cattle futures' turnaround.

August feeders closed 3.050 cents per pound higher at 145.350 cents.

Hogs Close Firmer

After CME August lean hogs expired on Monday, remaining contracts benefited from their sizable discounts to the exchange's hog index for Aug. 11 at 84.78 cents, said traders.

They said buying in the neighboring cattle market helped support lean hog contracts.

October ended 1.350 cents per pound to 70.525 cents, and December finished up 1.200 cents to 64.700 cents.

Futures made headway despite the seasonal supply increase that kept a lid on cash hog and wholesale pork values, said traders.

Monday and Tuesday's combined hog slaughter totaled 892,000 head, 72,000 more than the same period a week earlier and 31,000 more than a year ago, according to U.S. Department of Agriculture estimates.