CHICAGO, Oct 27 (Reuters) - Chicago Mercantile Exchange cattle futures rose for the third day in a row on Wednesday, nearing a two-month high on signs of improving cash markets. Traders also said a stepped-up pace of slaughter in recent days indicated demand for beef remains high. CME lean hog futures closed lower, with the front-month contract hitting its lowest on a continuous basis since Feb. 9 on technical selling. CME December live cattle futures settled up 0.125 cent at 131.575 per pound. The contract peaked at 131.925, its highest since Sept. 3 In feeder cattle, the most-active January contract fell 1.65 cents to settle at 158.95 cents per pound. The U.S. Agriculture Department on Wednesday morning said that choice cuts of beef fell $1.41 to $283.35 per hundredweight (cwt). The benchmark December contract dropped 0.6 cent to 71.975 cents per pound. February lean hogs closed the day down 0.825 cent at 74.325 cents per pound. (Reporting by Mark Weinraub; Editing by Aditya Soni)