· Analytic
Z15203 LC Feeder minus Live Cattle Spread Signal
CME Feeder Cattle minus Live Cattle front-month spread, z-scored on two years — the direct feedlot replacement-cost signal on CME Live Cattle forward returns.
At a glance
Current reading
+0.632
Wide Spread extreme-positive, 44 trading days running since Aug 31, 2026
Signal state
Extreme POS
phase +1, FC-LC spread well above 2-year baseline
Sample
Daily, 36-year span
CME FC and LC front-month daily close, 1990+
Historical IC
+0.276 (p = 1.8e-156)
Spearman vs LC fwd60d
Baseline LC fwd60d
+1.02%
Unconditional mean, median +1.74%
Wide Spread fwd60d
+2.87% mean
+1.85 pp above baseline, 67.7% hit rate
As of Oct 30, 2026. Updated nightly.
OBJECTIVE
A cattle feedlot buys feeder calves at approximately 700 pounds and feeds them corn-based rations to a 1,400-pound finished weight for sale. The economics are set by two market prices: Feeder Cattle front-month (the cost of replacement calves) and Live Cattle front-month (the sale price of finished animals). The spread FC minus LC — always positive because feeders trade at a premium to live cattle on a per-pound basis — is the direct read on feedlot replacement-cost pressure. When the FC-LC spread widens, replacement feeders are expensive relative to the finished-cattle price. Feedlot margins on new placements compress. Feeders slow their placement pace. Six to twelve months later the pipeline tightens and forward LC prices firm. This signal reads the FC-LC spread, z-scores on a 504-day (two-year) rolling window, and bounds with tanh. State thresholds plus or minus 0.2 (moderate) and plus or minus 0.5 (extreme). In July 2003 the signal pinned saturated-positive at composite +0.71 with LC at 74.20 cents per pound through the post-BSE recovery spread expansion; LC rallied 39 percent over the next sixty days as the feedlot margin pressure transmitted. In January 2020 the signal fired at -0.75 with LC at 126.73 cycle-high through narrow spread signaling placement expansion; LC crashed 34 percent over sixty days through the COVID packer-closure shock. The memorable twist: Grade A. Daily IC +0.276 at p=1.8e-156 (highly significant). Non-overlapping independence IC at p=0.0006 (STATISTICALLY SIGNIFICANT on 150 independent samples). One of only two LC signals that clears both the daily and the demanding independence test (the other is Z15201 LC-Corn Ratio). Read on for the current 44-day Extreme Positive firing, the 2003 and 2020 anchor cases, and how to pair with the LC fundamental stack.
LIVE CHART
LC Feeder-Live Cattle Spread Signal
Composite reads +0.632 as of October 30, 2026, in the Wide Spread extreme-positive band, 44 trading days running. CME Feeder Cattle minus Live Cattle spread has run well above the 2-year baseline through Q3-Q4 2026. CME Live Cattle (orange) has traded in the \$220-230 range through this firing. The 2003 July post-BSE Wide Spread anchor is visible as the deepest earlier firing.
COMPOSITE
+0.632 / tanh
STATE
Wide Spread
PHASE
+1
FWD 60d
+2.87% (baseline +1.02%)
SAMPLE N
8,989 days
STATE-CONDITIONAL EDGE
Forward 60-day returns by state
FORWARD 60-DAY RETURNS BY STATE
Mean forward-60-day benchmark return per composite state. Baseline (horizontal line) is the unconditional sample mean. Bars above the line are the constructive bands; bars below are the bearish bands.
TODAY’S PLAYBOOK READING
STATE
Extreme Pos
STATE AND HISTORY
Wide Spread extreme-positive firing, 44 trading days running since August 31, 2026. Phase +1 historically delivers mean fwd60d LC +2.87%, hit 67.7%, +1.85 pp above the +1.02% baseline. The 2003 post-BSE analog delivered +39%.
THE REPLACEMENT-COST MECHANISM
Feeder Cattle minus Live Cattle spread measures feedlot replacement-cost pressure. Wide spread → expensive feeders relative to finished cattle → margin compression on new placements → slower placement pace → pipeline tightens 6-12 months out → LC forward firms.
HOW TO POSITION
Pair with LC-corn ratio (the LC-Corn Ratio, feed-cost margin primary — the other Grade A LC signal), commercial positioning (the CFTC positioning signal hedge regime), export signals (Korea, Japan), cattle-on-feed (near-term supply). Replacement-cost + feed-cost + export-demand stacking is strongest LC bullish setup.
WHAT THE CHART SHOWS
The composite sits at +0.632 in the Wide Spread extreme-positive band, 44 trading days running since August 31, 2026. The blue signal line has held in the extreme-positive zone through Q3-Q4 2026 as CME FC-LC spread expanded on tight calf supply. CME Live Cattle (orange) has traded in the \$220-230 range. The 2003 July post-BSE Wide Spread anchor is visible as the deepest earlier firing before the +39% LC rally.
TOP INPUTS FIRING
- Primary composite +0.632 State Wide Spread extreme-positive; 44 trading days running.
- FC-LC spread elevated CME Feeder Cattle premium relative to Live Cattle has expanded well above the 2-year baseline through 2026 as tight calf supply drove feeder prices higher.
- State-conditional edge: +1.85 pp mean Wide Spread historical fwd60d LC mean +2.87%, baseline +1.02%, hit 67.7%. 2003 post-BSE analog delivered +39%. Current firing in strong EXTREME_POS sub-band.
THE TAKEAWAY
What this means for you today
THE SPREAD CALL
Composite +0.632, Wide Spread extreme-positive, 44 trading days running since August 31, 2026. CME FC-LC spread has run well above the 2-year baseline through Q3-Q4 2026 as feeder cattle premium expanded on tight calf supply and strong feedlot demand.
THE EMPIRICAL CONTEXT
Wide Spread historically delivers mean fwd60d LC of +2.87% (+1.85 pp vs baseline, hit 67.7%). The 2003 Q3 post-BSE analog delivered +39% as the replacement-cost pressure transmitted to forward supply tightening. Current firing is in the strong EXTREME_POS sub-band.
THE HONEST CAVEAT
This is a Grade A signal with Daily IC +0.276 and non-overlap test at p=0.0006 (statistically significant on independent samples). Direction is highly reliable. The 6-12 month breeding-herd transmission can take multiple quarters to fully play out beyond the 60-day forward horizon.
THE REGIME MAP
The three states, forward returns and sample share
Computed from 8,989 trading days with observable LC fwd60d. Baseline LC fwd60d (unconditional): plus 1.02 percent mean, median plus 1.74 percent. Wide spread historically precedes LC rallies via replacement-cost margin compression and 6-12 month placement slowdown.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Wide Spread TODAY | +1 | 49.6% (4492 d) | +3.35% | +2.33pp | Aug 2026, Jun 2026, Jun 2026 | |
| Normal | 0 | 16.4% (1481 d) | +1.98% | +0.95pp | Aug 2026, Jun 2026, May 2026 | |
| Narrow Spread | -1 | 34.0% (3076 d) | +0.86% | -0.16pp | Mar 2023, Mar 2023, Mar 2023 |
The historical pattern
Signature episodes in the 36-year sample
What this measures
The signal pulls CME Feeder Cattle front-month (FC_0_L1ND) and CME Live Cattle front-month (LC_0_L1ND) daily close, computes the spread FC minus LC, z-scores on a 504-day (two-year) rolling window with 60-day minimum sample, and bounds with tanh. State thresholds plus or minus 0.2 (moderate) and plus or minus 0.5 (extreme). Daily update as both front-month closes release.
Why it matters
Why FC-LC spread is a direct feedlot replacement-cost read
CME Feeder Cattle front-month tracks the price of 700-pound replacement calves. CME Live Cattle front-month tracks the price of 1,400-pound finished cattle. The spread FC minus LC is always positive (feeders trade at a premium on a per-pound basis) and measures feedlot replacement-cost pressure. Wide spread = expensive replacement calves relative to finished-cattle price = feedlot new-placement margin compression. The signal reads this margin pressure directly from the two futures curves, with no fundamental-data lag.
Why Grade A with independence-test significance
Daily Spearman IC against LC fwd60d is +0.276 at p-value 1.8e-156 across 8,989 observations — one of the strongest IC values in the LC signal library. Non-overlapping (every-60d) IC is at p-value 0.0006 across 150 independent samples — STATISTICALLY SIGNIFICANT on the demanding independence test. This is the critical validation that distinguishes Grade A from Grade B/C overlays. The LC signal library has only two Grade A signals: this and the LC-Corn Ratio signal.
How to use this signal today
Pair with the LC-corn ratio signal (the LC-Corn Ratio signal, feed-cost margin primary driver — the other Grade A LC signal), commercial positioning (the CFTC positioning signal hedge regime), Korea and Japan export signals (the Korea exports signal/the Japan exports signal demand-pull), USDA cattle-on-feed (near-term supply). The strongest LC bullish setup is Wide Spread + Compressed LC-Corn Ratio simultaneously = replacement-cost pressure + feed-cost pressure = coherent margin compression driving forward supply tightening.
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Not investment advice · The analysis on this page is informational and educational. Signal readings, historical case figures, and empirical statistics are derived from publicly available data and are provided without warranty. Hypothetical performance results have inherent limitations, including the benefit of hindsight. Readers who intend to trade should consult a licensed investment professional and see the research brief for the full disclaimer.
Last refreshed Oct 31, 2026 11:27 PM ET