CHICAGO, July 7 (Reuters) - Chicago Mercantile Exchange live cattle futures rallied on Friday on tight fed cattle supplies and higher cash market sales in the central U.S. Plains and western Midwest, traders said.

Beef packers were in need of cattle to fill near-term operations, including a large Saturday slaughter and a full week of production next week after this week's Independence Day holiday-abbreviated operations.

A drop in feed corn costs boosted feeder cattle futures, which further supported live cattle, traders said.

"The cash market was strong heading into the weekend with the big Saturday run. And with corn fading back to the lower end of the (recent trading) range, it put buying back in the feeders," said Matthew Wiegand, broker with FuturesOne.

"Boxed beef did take another step back. If that trend accelerates to the downside, it may start to blunt some of the live cattle strength because, now that we're out past July 4, we are in a cooler demand period," he added.

The U.S. Department of Agriculture estimated Saturday's cattle slaughter at 78,000 head, up from 22,000 head last week but down from 86,000 head a year ago.

Cash cattle traded late this week as high as $184 to $185 in northern feedlot areas, up from sales of around $178 to $182 last week, traders said.

Boxed beef prices, however, were lower on Friday. Choice cuts fell $2.97 to $316.90 per cwt, down $10.82 in the week. Select cuts declined $4.34 to $285.63 per cwt, down $8.00 this week.

August live cattle ended 2.425 cents higher at 177.000 cents per pound, while August feeders were 3.150 cents higher at 245.425 cents per pound.

CME lean hog futures ended mostly lower in a technical selling pullback from recent highs.

August futures were down 1.975 cents at 95.150 cents per pound after touching a near-four-month peak on Thursday.

(Reporting by Karl Plume; Editing by Shailesh Kuber)