· Analytic
Z3315 FC LC Substitution Signal
CME Live Cattle year-over-year z-scored on 5 years — reads LC momentum as the substitution signal for Feeder Cattle through the finished-cattle feedlot linkage.
At a glance
Current reading
-0.891
Low Substitution extreme-negative firing
Signal state
Moderate NEG
phase -1, LC YoY deeply below baseline
Sample
Daily CME, 36-year span
LC YoY z-score, 1990+
Daily IC
+0.177 (p < 1e-63)
Spearman vs FC fwd60d, n = 8,989
Non-overlap IC
+0.175 (p = 0.032)
Every-60d sample, n = 150, independently significant
Baseline FC fwd60d
+1.20%
Unconditional mean
As of Oct 30, 2026. Updated nightly.
OBJECTIVE
Feeder Cattle and Live Cattle are the same animal at different ages. Feeders become finished cattle 150 to 200 days after they enter the feedlot. The two markets move in tight correlation across cycles. This signal reads CME Live Cattle year-over-year momentum as a substitution signal for feeder cattle forward direction. The mechanism: when LC YoY runs HIGH (above 5-year baseline), the finished-cattle complex is in a bullish momentum cycle. Feedlot operators have incentive to pay firm for feeder inputs because the finished-cattle output remains firm. When LC YoY runs LOW (below baseline), the finished-cattle complex is in a bearish momentum cycle and feedlot operators have reason to bid softer for feeder inputs. The memorable finding: Grade B+ directional with independent-sample confirmation. Daily Spearman IC against FC fwd60d is plus 0.177 at p-value below 1e-63 across 8,989 observations. Non-overlapping (every-60-day) IC is plus 0.175 at p-value 0.032 across 150 independent samples — INDEPENDENTLY SIGNIFICANT. Phase +1 (High Substitution) delivers +2.89% fwd60d (+1.69 pp above baseline, hit 62%). Phase -1 (Low Substitution) delivers -0.59% (-1.80 pp below baseline, hit 48%). 3.49 pp directional spread. Current reading: Low Substitution extreme-negative firing at composite minus 0.892, 87 trading days running. LC YoY is deeply below the 5-year baseline. Historical Phase -1 delivers minus 1.80 pp below baseline. Modest-to-moderate bearish-FC lean.
LIVE CHART
FC LC Substitution Signal
Composite reads minus 0.892 as of October 30, 2026, in the Low Substitution extreme-negative band. LC YoY is deeply below the 5-year baseline. CME Feeder Cattle (orange) has traded in the \$330-340 range.
COMPOSITE
-0.892 / tanh
STATE
Low Substitution Ex
PHASE
-1
DAILY IC
+0.177 (p < 1e-63)
INDEPENDENCE
p = 0.032
TODAY’S PLAYBOOK READING
STATE
Moderate Neg
STATE AND HISTORY
Low Substitution extreme-negative firing at composite -0.892. Phase +1 (High Substitution) historically delivers +2.89 percent fwd60d / 62 percent hit / +1.69 pp above baseline. Phase -1 (Low Substitution) delivers -0.59 percent / 48 percent hit / -1.80 pp below baseline. Daily IC +0.177 at p-value below 1e-63. Independence test at p-value 0.032 across 150 non-overlapping samples.
THE LC SUBSTITUTION MECHANISM
FC and LC are the same animal at different ages. LC YoY momentum reads the finished-cattle complex and the feedlot pays-for-feeders decision. High LC YoY = firm finished-cattle complex = feedlot willingness to pay for feeders = bullish FC.
HOW TO POSITION
Treat as directional-lean. Pair with the FC US Herd Inventory signal, the FC LC Ratio Lag60d signal, the FC Cattle Crush Margin signal, and the LC-corn ratio signal. In the current Phase -1 extreme band, moderate bearish lean.
WHAT THE CHART SHOWS
The composite sits at minus 0.892 in the Low Substitution extreme-negative band. The blue signal line has moved below the minus 0.5 extreme threshold as CME Live Cattle year-over-year has moved deeply below the 5-year baseline. CME Feeder Cattle (orange) has traded in the \$330-340 range.
TOP INPUTS FIRING
- Primary composite -0.892 State Low Substitution extreme-negative firing.
- LC YoY deeply below 5-year baseline CME Live Cattle year-over-year percent change is in the lowest percentile of the 5-year distribution. Finished-cattle complex is in a bearish momentum cycle.
- Non-overlap IC confirms directional edge Daily IC plus 0.177 at p-value below 1e-63. Independence test at p-value 0.032 across 150 non-overlapping samples. Clean positive polarity.
THE TAKEAWAY
What this means for you today
THE LC SUBSTITUTION CALL
Composite -0.892, Low Substitution extreme-negative. LC YoY is deeply below the 5-year rolling baseline. Finished-cattle complex is in a bearish momentum cycle.
THE EMPIRICAL CONTEXT
Phase -1 (Low Substitution) historical fwd60d FC mean minus 0.59 percent (minus 1.80 pp vs baseline, hit 48 percent). Moderate bearish lean. Phase +1 (High Substitution) is the strongly-bullish band at +1.69 pp above baseline.
THE HONEST CAVEAT
Daily IC plus 0.177 at p-value below 1e-63 strongly significant. Independence test at p-value 0.032 across 150 non-overlapping samples. Grade B+ directional. Clean positive polarity — empirical direction matches a-priori economic logic.
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 independent-sample confirmation.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| High Substitution | +1 | 42.7% (3865 d) | +2.15% | +0.95pp | Apr 2026, Apr 2026, Feb 2026 | |
| Normal | 0 | 14.7% (1331 d) | +1.52% | +0.31pp | Jun 2026, Jun 2026, Apr 2026 | |
| Low Substitution TODAY | -1 | 42.6% (3853 d) | -0.20% | -1.41pp | Jun 2026, Jun 2026, Jun 2026 |
The historical pattern
Signature episodes in the 36-year sample
THE TRACK RECORD
State changes
| State | Start | End | Duration | Fwd 60d FC |
|---|---|---|---|---|
| Low Substitution | 10/30/2024 | 11/08/2024 | 8d | +3.76% |
| Normal | 11/11/2024 | 11/13/2024 | 3d | +1.02% |
| Low Substitution | 11/14/2024 | 11/15/2024 | 2d | +2.76% |
| Normal | 11/18/2024 | 11/22/2024 | 5d | +3.97% |
| High Substitution | 11/25/2024 | 11/27/2024 | 3d | -0.55% |
| Normal | 11/29/2024 | 11/29/2024 | 1d | -1.39% |
| High Substitution | 12/02/2024 | 02/05/2025 | 45d | -3.29% |
| Normal | 02/06/2025 | 02/19/2025 | 9d | -7.06% |
| Low Substitution | 02/20/2025 | 02/21/2025 | 2d | -2.65% |
| Normal | 02/24/2025 | 02/25/2025 | 2d | -0.73% |
| Low Substitution | 02/26/2025 | 02/26/2025 | 1d | -1.93% |
| Normal | 02/27/2025 | 02/27/2025 | 1d | -1.02% |
| Low Substitution | 02/28/2025 | 02/28/2025 | 1d | -0.51% |
| Normal | 03/03/2025 | 03/03/2025 | 1d | +0.68% |
| Low Substitution | 03/04/2025 | 03/04/2025 | 1d | +2.29% |
| Normal | 03/05/2025 | 03/14/2025 | 8d | +1.09% |
| High Substitution | 03/17/2025 | 11/21/2025 | 175d | +6.03% |
| Normal | 11/24/2025 | 11/25/2025 | 2d | +2.04% |
| High Substitution | 11/26/2025 | 01/26/2026 | 40d | +1.98% |
| Normal | 01/27/2026 | 01/30/2026 | 4d | +1.86% |
| High Substitution | 02/02/2026 | 02/05/2026 | 4d | +2.33% |
| Normal | 02/06/2026 | 02/06/2026 | 1d | +4.80% |
| High Substitution | 02/09/2026 | 03/06/2026 | 19d | +5.75% |
| Normal | 03/09/2026 | 04/07/2026 | 21d | +11.20% |
| High Substitution | 04/08/2026 | 04/20/2026 | 9d | +11.13% |
| Normal | 04/21/2026 | 04/27/2026 | 5d | +5.57% |
| High Substitution | 04/28/2026 | 04/29/2026 | 2d | +3.83% |
| Normal | 04/30/2026 | 06/02/2026 | 23d | +3.09% |
| Low Substitution | 06/03/2026 | 06/03/2026 | 1d | +2.00% |
| Normal | 06/04/2026 | 06/04/2026 | 1d | +1.32% |
| Low Substitution | 06/05/2026 | 06/15/2026 | 7d | +3.29% |
| Normal | 06/16/2026 | 06/29/2026 | 9d | +1.86% |
| Low Substitution | 06/30/2026 | 10/30/2026 | 87d | +2.73% |
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 pulls CME Live Cattle back-adjusted continuous closes, computes year-over-year percent change, z-scores on a 5-year rolling window, clips to [-3, +3], and bounds with tanh. Positive composite (high LC YoY) = bullish FC a-priori; empirical validation confirms direction. State thresholds plus or minus 0.2 (moderate) and plus or minus 0.5 (extreme). Daily release.
Why it matters
Why LC momentum substitutes for FC direction
Feeder Cattle and Live Cattle are the same animal at different ages. Feeders become finished cattle 150 to 200 days after they enter the feedlot. The two markets move in tight correlation because feedlot operators make the feeder-buying decision based on forward finished-cattle expectations. LC YoY momentum captures the finished-cattle complex direction and translates to feeder-cattle pricing through the feedlot bid-ask decision.
Why Grade B+ with independent-sample confirmation
Daily Spearman IC against FC fwd60d is plus 0.177 at p-value below 1e-63 across 8,989 observations — strongly significant daily. Non-overlapping (every-60-day) independence test at p-value 0.032 across 150 independent samples — INDEPENDENTLY SIGNIFICANT. 3.49 pp directional spread between tails. Clean positive polarity — empirical direction matches a-priori economic logic.
How to use this signal today
In the current Low Substitution extreme-negative band, moderate bearish FC lean. Pair with the FC US Herd Inventory signal (strongest-IC structural anchor), the FC LC Ratio Lag60d signal (lagged LC/FC ratio), the FC Cattle Crush Margin signal (feedlot incentive), and the LC-corn ratio signal. The LC substitution signal is complementary to the LC-fundamental stack.
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 04:00 PM ET