· Analytic
Z3276 LC Processed-Foods PPI Signal
BLS Producer Price Index for processed foods and feeds, year-over-year z-scored on a two-year window — the broader food-inflation context anchor for CME Live Cattle nominal prices.
At a glance
Current reading
-0.971
Low PPI extreme-negative, 126 trading days running
Signal state
Extreme NEG
phase -1, PPI processed foods YoY well below 2-year baseline
Sample
Monthly BLS PPI, 36-year span
BLS PPI processed foods and feeds YoY, monthly ffill daily
Historical IC
+0.026 (p = 0.013)
Spearman vs LC fwd60d, weak daily
Baseline LC fwd60d
+1.02%
Unconditional mean, median +1.74%
Low PPI fwd60d
+0.34% mean
-0.68 pp below baseline, 54.1% hit rate (per-day sample)
As of Oct 30, 2026. Updated nightly.
OBJECTIVE
The Bureau of Labor Statistics publishes the Producer Price Index monthly, with a sub-index for processed foods and feeds covering the wholesale inputs to the retail food supply chain. Where ground beef retail CPI captures the consumer-side demand pass-through, PPI processed foods captures the producer-side cost environment broader than beef alone — grain milling, processed meat products, dairy, and animal feed all roll into the index. This signal reads the PPI processed-foods series year-over-year, 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). The signal is a context anchor for the broader food-inflation environment surrounding CME Live Cattle rather than a direct supply-demand driver. In July 2003 the signal fired positive-side at composite +0.68 with LC at 72.60 cents per pound through the post-BSE food-cost environment firming; LC rallied 39 percent over the next sixty days. In January 2015 the signal fired negative-side at -0.72 with LC at 155.50 during the global commodity disinflation; LC fell 15 percent over the next sixty days. The memorable twist: this signal is a Grade C- CONTEXT overlay with weak daily IC (+0.026, p=0.013) and non-overlapping independence test NOT significant (p=0.88). The signal has historical narrative value as the broader food-inflation anchor but should not be sized as a standalone directional driver. Pair with the LC fundamental stack (LC-corn ratio, commercial positioning, cattle-on-feed, retail ground beef) for direction. Read on for the current 126-day Low PPI firing, the 2003 and 2015 anchor cases, and how to use this signal in context.
LIVE CHART
LC Processed-Foods PPI Signal
Composite reads -0.971 as of October 30, 2026, in the Low PPI extreme-negative band, 126 trading days running. BLS PPI processed foods and feeds YoY has deflated vs the 2-year baseline. CME Live Cattle (orange) has traded in the \$220-230 range through this firing — forward curve has not reflected the broader-inflation disinflation environment. The 2015 Q1 anchor case is visible as the deepest Low PPI firing before a 15 percent LC drop.
COMPOSITE
-0.971 / tanh
STATE
Low PPI
PHASE
-1
FWD 60d
+0.34% (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 Neg
STATE AND HISTORY
Low PPI extreme-negative firing, 126 trading days running. Historical Phase -1 delivers mean fwd60d LC +0.34% per-day sample — modestly below the +1.02% baseline. The 2015 Q1 anchor case delivered -15% through global commodity disinflation.
THE CONTEXT-ANCHOR MECHANISM
PPI processed foods captures the wholesale cost environment broader than beef alone — grain milling, processed meats, dairy, animal feed. When PPI deflates, broader food inflation is softening and LC nominal pricing has less inflation support.
HOW TO POSITION
Treat as broader food-inflation CONTEXT overlay. Pair with the LC-corn ratio signal (feedlot-margin primary), commercial positioning (hedge regime), BLS ground beef retail (demand-side overlay), and cattle-on-feed (near-term supply). PPI is the broadest overlay, confirming or contradicting direction.
WHAT THE CHART SHOWS
The composite sits at -0.971 in the Low PPI extreme-negative band, 126 trading days running. The blue signal line has pinned at the saturated-negative level through the entire 2026 window as BLS PPI processed foods YoY has deflated. CME Live Cattle (orange) has traded in the \$220-230 range through the firing. The 2015 Q1 anchor case is visible as the deepest Low PPI firing before a 15 percent LC drop.
TOP INPUTS FIRING
- Primary composite -0.971 State Low PPI extreme-negative; 126 trading days running.
- BLS PPI processed foods deflated BLS Producer Price Index for processed foods and feeds YoY has run well below the 2-year baseline through 2026 Q3-Q4. Broader food-inflation disinflation environment.
- State-conditional edge: -0.68 pp mean Low PPI historical fwd60d LC mean +0.34% per-day, baseline +1.02%. Modestly below baseline. 2015 anchor case delivered -15% through global disinflation. 2016 paradox case saw LC rally +27% despite Low PPI as supply tightening overrode.
THE TAKEAWAY
What this means for you today
THE INFLATION CONTEXT CALL
Composite -0.971, Low PPI extreme-negative, 126 trading days running. BLS PPI processed foods and feeds YoY has run well below the 2-year baseline through Q3-Q4 2026 as the broader food-inflation environment deflates. CME Live Cattle has traded in the \$220-230 range through this firing.
THE EMPIRICAL CONTEXT
Low PPI historically delivers mean fwd60d LC of +0.34% per-day (vs +1.02% baseline, -0.68 pp below), hit rate 54.1%. Run-entry stat -0.20% (direction consistent). The 2015 Q1 anchor case delivered -15% through global commodity disinflation; current environment echoes the disinflation setup but LC price is at a cyclical high rather than mid-cycle.
THE HONEST CAVEAT
Monthly cadence; intra-month moves read one month late. Daily IC is only marginally significant (+0.026, p=0.013). Non-overlapping independence test does NOT reach significance (p=0.88). Grade C- context overlay only — do not size positions on this signal alone.
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. Grade C- context overlay — direction is modest; edge is weak.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| High PPI | +1 | 40.4% (3658 d) | +4.00% | +2.97pp | Feb 2026, Jan 2026, Jun 2025 | |
| Normal | 0 | 15.7% (1424 d) | +2.45% | +1.43pp | Mar 2026, Jan 2026, Dec 2025 | |
| Low PPI TODAY | -1 | 43.8% (3967 d) | -0.20% | -1.22pp | May 2026, Apr 2025, Jul 2024 |
The historical pattern
Signature episodes in the 36-year sample
What this measures
The signal pulls the BLS Producer Price Index for processed foods and feeds (BLS_PPI_MONTHLY, series_name containing “processed foods” or “feed”), forward-fills to daily cadence, computes year-over-year percent change over 252 trading days, z-scores on a 504-day (two-year) rolling window with a 126-day minimum sample, and bounds with tanh. State thresholds plus or minus 0.2 (moderate) and plus or minus 0.5 (extreme). Monthly release cadence.
Why it matters
Why PPI processed foods matters as broader-inflation context
The BLS Producer Price Index for processed foods and feeds covers wholesale costs across the food value chain: grain milling output, processed meat products, dairy processing, animal feed. This is broader than beef alone and reads the overall inflation environment surrounding CME Live Cattle nominal pricing. When PPI deflates year-over-year, the broader food-cost environment is softening and LC nominal pricing has less inflation support. When PPI firms, nominal pricing has an inflation tailwind. The signal is a context ANCHOR, not a specific supply or demand driver.
Why this is Grade C- context overlay
Daily IC against LC fwd60d is +0.026 at p-value 0.013 (marginally significant), but non-overlapping (every-60-day) independence test returns p-value 0.88 (NOT significant). The signal is weak on direct predictive power. Phase 0 (Normal) delivers the highest state-conditional return (+2.96% per-day), which is unusual and suggests the signal reads macro-inflation context more than LC-specific direction. Treat as a reasonableness-check overlay, not as a size-the-position input.
How to use this signal today
Pair with the LC-corn ratio (feedlot-margin primary), commercial positioning (hedge regime), BLS ground beef retail (demand-side overlay), and cattle-on-feed (near-term supply). this signal is the broadest context overlay in the LC stack. The current Low PPI firing confirms the broader-inflation disinflation environment but does not drive direction on its own. The LC-corn ratio signal and cattle-on-feed carry the direction.
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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 08:52 PM ET