· Analytic
Z2861 FC-LC Spread Signal
CME Feeder Cattle minus Live Cattle spread z-scored on 5 years as a Grade B directional signal on CME Feeder Cattle forward returns (marginal independent-sample significance).
At a glance
Current reading
+0.951
Wide FC-LC Spread extreme-positive, 333d running
Signal state
Extreme POS
phase +1, FC-LC spread at cycle-peak extreme
Sample
Daily CME, 36-year span
FC minus LC spread 5y z-score, 1990+
Daily IC
-0.150 (p < 1e-45)
Spearman vs FC fwd60d, n = 8,989
Non-overlap IC
-0.148 (p = 0.072)
Every-60d sample, n = 150, MARGINAL (just over 0.05)
Baseline FC fwd60d
+1.20%
Unconditional mean
As of Oct 30, 2026. Updated nightly.
OBJECTIVE
CME Feeder Cattle and CME Live Cattle are the same animal at different ages. Their price spread reflects the market consensus on the forward feedlot producer margin. When FC trades at a wide positive premium to LC, it signals cycle-peak feeder-cattle prices relative to finished cattle — feedlots are paying premium prices for feeders they will finish at competitive LC prices 150-200 days later. When FC trades at a narrow or negative spread to LC, the cycle is at a trough. The empirical mechanism: when the FC-LC spread runs HIGH on the 5-year z-score, feeder prices are at cycle-peak extremes relative to the broader cattle complex. Historically these peaks mean-revert over the next 60 days — bearish FC. When the spread runs LOW, feeder prices are at cycle-trough extremes — bullish FC on mean-reversion. The honest grade: Daily Spearman IC against FC fwd60d is minus 0.150 at p-value below 1e-45 across 8,989 observations — strongly significant daily. Non-overlapping (every-60-day) IC is minus 0.148 at p-value 0.072 across 150 independent samples — MARGINAL independence (just above the 0.05 threshold). This is Grade B (not Grade A/B+) because the non-overlap test is marginal. Both IC tests agree in negative sign. Per-day sampling: Phase +1 (Wide FC-LC Spread) delivers -0.06% fwd60d (-1.26 pp below baseline, hit 47%). Phase -1 (Narrow FC-LC Spread) delivers +2.02% (+0.82 pp above baseline, hit 60%). 1.72 pp per-day directional spread. Current reading: Wide FC-LC Spread extreme-positive firing at composite plus 0.951, 333 trading days running. The FC-LC spread has been at cycle-peak extreme for over a year. Historical Phase +1 delivers minus 1.26 pp below baseline — modest bearish-FC lean on mean-reversion.
LIVE CHART
FC-LC Spread Signal
Composite reads plus 0.951 as of October 30, 2026, in the Wide FC-LC Spread extreme-positive band. The spread has been at cycle-peak extreme for over a year. CME Feeder Cattle (orange) has traded in the \$330-340 range.
COMPOSITE
+0.951 / tanh
STATE
Wide FC-LC Spread Ex
PHASE
+1
DAILY IC
-0.150 (p < 1e-45)
INDEPENDENCE
p = 0.072 (marginal)
TODAY’S PLAYBOOK READING
STATE
Extreme Pos
STATE AND HISTORY
Wide FC-LC Spread extreme-positive firing at composite +0.951, 333 days running. Phase +1 (Wide Spread) historically delivers -0.06 percent fwd60d / 47 percent hit / -1.26 pp below baseline. Phase -1 (Narrow Spread) delivers +2.02 percent / 60 percent hit / +0.82 pp above baseline. Daily IC -0.150 at p-value below 1e-45 strongly significant. Independence test at p-value 0.072 across 150 non-overlapping samples — MARGINAL.
THE SPREAD MECHANISM
FC and LC are the same animal at different ages. The FC-LC spread reads the market consensus on forward feedlot producer margin. Wide positive spread = cycle-peak feeder prices = mean-reverts bearishly over 60d. Narrow or negative spread = cycle-trough = mean-reverts bullishly.
HOW TO POSITION
Treat as supportive-but-not-standalone evidence due to marginal non-overlap significance. Pair with the FC US Herd Inventory signal, the FC Light Placement Pace signal, the FC Northern SNOTEL SWE signal, and the LC-corn ratio signal. In the current Wide Spread band, modest bearish lean.
WHAT THE CHART SHOWS
The composite sits at plus 0.951 in the Wide FC-LC Spread extreme-positive band. The blue signal line has been above the plus 0.5 extreme threshold for over a year as the FC-LC spread remains at cycle-peak extreme. CME Feeder Cattle (orange) has traded in the \$330-340 range.
TOP INPUTS FIRING
- Primary composite +0.951 State Wide FC-LC Spread extreme-positive firing, 333 days running.
- FC-LC spread at cycle-peak extreme CME Feeder Cattle minus CME Live Cattle spread is in the highest percentile of the 5-year distribution. Feeder prices at cycle-peak relative to Live Cattle.
- Marginal non-overlap IC – supportive evidence Daily IC minus 0.150 at p-value below 1e-45 strongly significant. Non-overlap IC p-value 0.072 MARGINAL (standard 0.05 threshold). Grade B directional — supportive-but-not-standalone.
THE TAKEAWAY
What this means for you today
THE SPREAD CALL
Composite plus 0.951, Wide FC-LC Spread extreme-positive. The FC-LC spread has been at cycle-peak extreme for over a year (333 trading days running).
THE EMPIRICAL CONTEXT
Phase +1 (Wide Spread) historical fwd60d FC mean minus 0.06 percent (minus 1.26 pp vs baseline, hit 47 percent). Modest bearish lean on mean-reversion. Phase -1 (Narrow Spread) is the bullish band at +0.82 pp above baseline.
THE HONEST CAVEAT
Daily IC minus 0.150 at p-value below 1e-45 strongly significant. Independence test at p-value 0.072 MARGINAL (standard threshold is 0.05 — this signal is just over). Grade B directional, supportive-but-not-standalone evidence.
THE REGIME MAP
The three states, forward returns and sample share
Computed from 8,989 trading days with observable FC fwd60d. Baseline FC fwd60d (unconditional): plus 1.20 percent mean. Grade B directional with MARGINAL independent-sample significance (non-overlap p=0.072, standard threshold 0.05).
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Wide FC-LC Spread TODAY | +1 | 41.0% (3714 d) | +0.70% | -0.51pp | Jul 2025, Feb 2024, Feb 2024 | |
| Normal | 0 | 10.3% (928 d) | +1.88% | +0.67pp | Jun 2025, May 2025, May 2025 | |
| Narrow FC-LC Spread | -1 | 48.7% (4407 d) | +2.88% | +1.68pp | May 2025, May 2025, May 2025 |
The historical pattern
Signature episodes in the 36-year sample
THE TRACK RECORD
State changes
| State | Start | End | Duration | Fwd 60d FC |
|---|---|---|---|---|
| Narrow FC-LC Spread | 10/30/2024 | 02/21/2025 | 78d | +3.76% |
| Normal | 02/24/2025 | 03/26/2025 | 23d | -0.73% |
| Narrow FC-LC Spread | 03/27/2025 | 03/31/2025 | 3d | +7.00% |
| Normal | 04/01/2025 | 04/02/2025 | 2d | +9.62% |
| Narrow FC-LC Spread | 04/03/2025 | 04/08/2025 | 4d | +15.08% |
| Normal | 04/09/2025 | 04/21/2025 | 8d | +13.07% |
| Narrow FC-LC Spread | 04/22/2025 | 04/24/2025 | 3d | +19.03% |
| Normal | 04/25/2025 | 04/30/2025 | 4d | +15.18% |
| Narrow FC-LC Spread | 05/01/2025 | 05/01/2025 | 1d | +13.75% |
| Normal | 05/02/2025 | 05/02/2025 | 1d | +11.95% |
| Narrow FC-LC Spread | 05/05/2025 | 05/06/2025 | 2d | +12.17% |
| Normal | 05/07/2025 | 05/08/2025 | 2d | +12.48% |
| Narrow FC-LC Spread | 05/09/2025 | 05/09/2025 | 1d | +12.13% |
| Normal | 05/12/2025 | 05/14/2025 | 3d | +8.45% |
| Narrow FC-LC Spread | 05/15/2025 | 05/15/2025 | 1d | +8.85% |
| Normal | 05/16/2025 | 05/16/2025 | 1d | +8.53% |
| Narrow FC-LC Spread | 05/19/2025 | 06/09/2025 | 15d | +8.42% |
| Normal | 06/10/2025 | 07/07/2025 | 18d | +7.32% |
| Wide FC-LC Spread | 07/08/2025 | 10/30/2026 | 333d | +7.76% |
Scroll inside the table for the full history. Forward 60-day FC is measured from each run’s start date; a reader cannot trade off a start-date they only identify in hindsight, so this is a transparency log, not an alpha claim. Asterisked (*) returns are partial. The run is less than 60 trading days old. The full 60-day comparable fills in as more data arrives.
What this measures
The signal computes CME Feeder Cattle front-month close minus CME Live Cattle front-month close, z-scores on a 5-year rolling window, clips to [-3, +3], and bounds with tanh. State thresholds plus or minus 0.2 (moderate) and plus or minus 0.5 (extreme). Daily release.
Why it matters
Why the FC-LC spread reads cycle position
FC and LC are the same animal at different ages — feeders become finished cattle 150-200 days after feedlot entry. Their price spread reflects the market consensus on the forward feedlot producer margin. Cycle-peak feeder prices create wide positive spreads; cycle-trough conditions create narrow or negative spreads. The spread captures the full cycle in one series.
Why Grade B with marginal independent-sample significance
Daily Spearman IC against FC fwd60d is minus 0.150 at p-value below 1e-45 across 8,989 observations — strongly significant daily. Non-overlapping (every-60-day) independence test at p-value 0.072 across 150 independent samples — MARGINAL (standard threshold 0.05). The non-overlap sample is small enough that the signal falls just below the Grade A/B+ independence bar. Grade B reflects supportive-but-not-standalone evidence.
How to use this signal today
In the current Wide FC-LC Spread extreme-positive band (333 days running), modest bearish FC lean on mean-reversion. HOWEVER, the mean-reversion has been delayed by over a year — cycle-structural persistence can override mean-reversion. Pair with the FC US Herd Inventory signal, the FC Light Placement Pace signal, the FC Northern SNOTEL SWE signal, and the LC-corn ratio signal.
Related signals
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 Nov 01, 2026 04:51 PM ET