Feeder Cattle

FEEDER's 20-day volatility stands at 0.88% a day, making it one of the calmer of the commodities Kinzan tracks (their median is 1.88%).

Today's move is well inside its normal range: +0.5σ, an entirely ordinary session.

It sits in the lower half of its 24-hour range of 344.725–348.15, measured on hourly closes.

Most of the move came in the New York session (13:00–22:00 UTC), which accounted for about 100% of the day's price action.

Over the last 60 sessions of daily returns, it has moved most closely with CATTLE (+0.62, a strong relationship).

Its last close is at the 61st percentile of its own last 83 sessions, and its 20-day volatility at the 16th.

Market read: Feeder Cattle is trading in the middle of its range, supported by steady New York buying.

What it is

Feeder cattle are weaned calves and yearlings, raised on grass and ready to enter a feedlot, where months on a grain ration bring them to slaughter weight. The CME contract is quoted in US cents per pound and covers 50,000 pounds. It is settled in cash, not by delivering animals, against the CME Feeder Cattle Index, a weighted average of prices paid for animals in a set weight range across a group of central and western states. That makes it the price of beef’s raw material, one step earlier in the chain than live cattle.

What drives it

A feedlot’s bid for a young animal is, in effect, a sum: what it expects to receive for the finished animal, minus the cost of feeding it to that point. That puts two other prices at the heart of this market — live cattle futures for the sale, and corn for the feed bill. When corn rises sharply, feeder cattle often fall, because every extra cent on the ration comes out of the feedlot’s bid. Pasture is the third variable. In good grazing years ranchers keep calves on grass longer and compete with feedlots to buy them; drought forces early sales that can depress prices in the short run and shrink the herd for years afterwards. Calf sales are heaviest in the autumn, after weaning. The USDA’s cattle inventory counts and the placements figure in its monthly Cattle on Feed report are watched closely.

How it trades through the day

Feeder cattle keep the same short daytime hours as other CME livestock contracts: trading begins in the Chicago morning and ends early in the afternoon, entirely inside the New York block (13:00–22:00 UTC). There is no overnight market, so nothing trades in the Asia block (22:00–07:00 UTC) or London block (07:00–13:00 UTC). Answering to both corn and fed-cattle prices, it is often the more volatile of the two cattle contracts.

What it tends to move with

Feeder cattle tend to move with live cattle, usually with larger swings, and have often moved inversely to corn, since cheaper feed makes young animals more valuable to the feedlots that buy them. Lean hogs share the exposure to feed costs but not the cattle cycle, so the two rarely move together for long.