By Kelsey Gee

CHICAGO--U.S. cattle futures fell from seven-month peaks on Friday, as investors dialed back expectations for a steeper climb after this week's surge in the cash markets.

Cattle futures for February fell 0.775 cent, or 0.6%, to $1.2025 a pound, after hitting the highest closing price for a front-month contract since June 10 on Thursday. For the week, that contract was up 1.5%. April live cattle fell 0.9 cent to $1.18975 a pound. Feeder cattle for January picked up 1.15 cents to $1.3310 a pound, marking a 2% jump from last Friday's settlement.

Cattle prices were underpinned this week by an upswing in the wholesale value of beef, which renewed optimism in the strength of retail demand for steaks and ground beef, even at relatively steep prices. Even though the beef market softened slightly on Thursday and Friday, cattle feeders were emboldened by the earlier gains to seek more money for their livestock in the cash markets.

After a steady climb in cash and futures prices since early December, traders scaled-back bullish bets and booked profits on Friday, while working to gauge the strength of meatpacker buying interest in the coming weeks.

Beef processors late this week paid from $1.22 to 1.22 1/2 a pound live in Texas, Kansas and Nebraska, following sales on Wednesday that averaged $1.20 1/4 a pound. All major beef processing companies participated in the bidding war over available supplies, analysts said, reflecting strong demand to fill orders for meat.

On a dressed basis--a form of marketing that accounts for the meat yielded from a carcass--sales have been reported from $1.94 to $1.95 a pound, up more than 5 cents from what many producers took home last week.

Also supporting prices this week has been a dip in supplies of market-ready cattle, after a major swell in production in the fourth quarter of 2016.

Hog futures remained in a tight trading range that has kept prices between 63.50 and 66.15 cents a pound every trading session for the past month.

February lean-hog futures slid 0.125 cent, or 0.2%, to end at 65.30 cents a pound, slightly lower than last Friday's close. April hogs fell 0.5 cent to 68.475 cents a pound.

Write to Kelsey Gee at kelsey.gee@wsj.com

(END) Dow Jones Newswires

January 20, 2017 16:02 ET (21:02 GMT)