· Analytic
Z3318 FC PPI Processed Foods Signal
BLS Producer Price Index for processed foods year-over-year as a Grade B+ directional signal with independent-sample confirmation on CME Feeder Cattle forward returns.
At a glance
Current reading
-0.971
Low PPI moderate-negative
Signal state
Moderate NEG
phase -1, processed-foods PPI YoY compressed
Sample
Daily CME, 36-year span
BLS the processed-foods PPI index, 1990+
Daily IC
+0.176 (p < 1e-63)
Spearman vs FC fwd60d, n = 8,989
Non-overlap IC
+0.230 (p = 0.005)
Every-60d sample, n = 150, independently significant
Baseline FC fwd60d
+1.20%
Unconditional mean
As of Oct 30, 2026. Updated nightly.
OBJECTIVE
BLS publishes the Producer Price Index for processed foods and feeds monthly. This index captures the wholesale price inflation for processed foods including meat products, cereals, dairy, and bakery goods. The year-over-year change in this PPI reads broader meat and food inflation at the producer stage of the value chain. The signal mechanism: when processed-foods PPI runs hot (high YoY), broader meat inflation is firm and nominal feeder cattle prices find support. When processed-foods PPI runs cold (low or negative YoY), broader meat deflation drags nominal feeder cattle. The signal reads a-priori positive composite = bullish FC, and empirical validation confirms the direction. The memorable finding: Grade B+ directional with independent-sample confirmation. Daily Spearman IC against FC fwd60d is plus 0.176 at p-value below 1e-63 across 8,989 observations. Non-overlapping (every-60-day) IC is plus 0.230 at p-value 0.005 across 150 independent samples — INDEPENDENTLY SIGNIFICANT. Phase +1 (High PPI) delivers +2.24% fwd60d (+1.03 pp above baseline, hit 60%). Phase -1 (Low PPI) delivers +0.03% (-1.17 pp below baseline, hit 47%). 2.20 pp directional spread. Current reading: Low PPI moderate-negative firing at composite minus 0.971, 126 trading days running. Processed-foods PPI YoY is running below trend. Historical Phase -1 delivers near-neutral fwd60d (-1.17 pp vs baseline). Modest bearish lean.
LIVE CHART
FC PPI Processed Foods Signal
Composite reads minus 0.971 as of October 30, 2026, in the Low PPI moderate-negative band. Processed-foods PPI YoY is running cold. CME Feeder Cattle (orange) has traded in the \$330-340 range.
COMPOSITE
-0.971 / tanh
STATE
Low PPI
PHASE
-1
DAILY IC
+0.176 (p < 1e-63)
INDEPENDENCE
p = 0.005
TODAY’S PLAYBOOK READING
STATE
Moderate Neg
STATE AND HISTORY
Low PPI moderate-negative firing at composite minus 0.971. Phase +1 (High PPI) historically delivers +2.24 percent fwd60d / 60 percent hit / +1.03 pp above baseline. Phase -1 (Low PPI) delivers +0.03 percent / 47 percent hit / -1.17 pp below baseline. Daily IC +0.176 at p-value below 1e-63. Independence test at p-value 0.005 across 150 non-overlapping samples.
THE PPI INFLATION MECHANISM
Processed-foods PPI YoY reads wholesale meat and food inflation. High PPI = firm nominal food inflation = support for nominal feeder cattle = bullish FC. Low PPI = soft nominal food inflation = headwind for nominal feeder cattle = bearish FC.
HOW TO POSITION
Treat as directional-lean. Pair with the FC US Herd Inventory signal, the FC Term Structure Curve signal, the FC Light Placement Pace signal, and the LC-corn ratio signal. In the current Phase -1 band, modest bearish lean.
WHAT THE CHART SHOWS
The composite sits at minus 0.971 in the Low PPI moderate-negative band. The blue signal line has moved to the lower bound as processed-foods PPI YoY has running below trend. CME Feeder Cattle (orange) has traded in the \$330-340 range.
TOP INPUTS FIRING
- Primary composite -0.971 State Low PPI moderate-negative firing.
- Processed-foods PPI YoY running cold BLS the processed-foods PPI index year-over-year change is running below trend. Broader wholesale meat and food inflation at the producer stage of the value chain is running cold.
- Non-overlap IC confirms directional edge Daily IC plus 0.176 at p-value below 1e-63. Independence test at p-value 0.005 across 150 non-overlapping samples. Clean positive polarity with independent-sample confirmation.
THE TAKEAWAY
What this means for you today
THE PPI CALL
Composite minus 0.971, Low PPI moderate-negative. Processed-foods PPI YoY is running below trend. Broader wholesale meat and food inflation is running cold.
THE EMPIRICAL CONTEXT
Phase -1 (Low PPI) historical fwd60d FC mean plus 0.03 percent (minus 1.17 pp vs baseline, hit 47 percent). Modest bearish lean. Phase +1 (High PPI) is the strongly-bullish band at +1.03 pp above baseline.
THE HONEST CAVEAT
Daily IC plus 0.176 at p-value below 1e-63 strongly significant. Independence test at p-value 0.005 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 PPI | +1 | 40.4% (3658 d) | +1.99% | +0.78pp | Feb 2026, Jan 2026, Jun 2025 | |
| Normal | 0 | 15.7% (1424 d) | +2.03% | +0.82pp | Mar 2026, Jan 2026, Dec 2025 | |
| Low PPI TODAY | -1 | 43.8% (3967 d) | +0.45% | -0.75pp | May 2026, Apr 2025, Jul 2024 |
The historical pattern
Signature episodes in the 36-year sample
THE TRACK RECORD
State changes
| State | Start | End | Duration | Fwd 60d FC |
|---|---|---|---|---|
| Low PPI | 10/30/2024 | 10/31/2024 | 2d | +3.76% |
| Normal | 11/01/2024 | 11/29/2024 | 20d | +5.39% |
| High PPI | 12/02/2024 | 01/31/2025 | 42d | -3.29% |
| Normal | 02/03/2025 | 02/28/2025 | 19d | -7.23% |
| High PPI | 03/03/2025 | 03/03/2025 | 1d | +0.68% |
| Normal | 03/04/2025 | 03/31/2025 | 20d | +2.29% |
| Low PPI | 04/01/2025 | 04/30/2025 | 21d | +9.62% |
| Normal | 05/01/2025 | 05/30/2025 | 21d | +13.75% |
| High PPI | 06/02/2025 | 12/02/2025 | 128d | +9.10% |
| Normal | 12/03/2025 | 12/31/2025 | 20d | -0.52% |
| High PPI | 01/02/2026 | 01/02/2026 | 1d | -4.81% |
| Normal | 01/05/2026 | 01/30/2026 | 19d | -4.72% |
| High PPI | 02/02/2026 | 03/03/2026 | 21d | +2.33% |
| Normal | 03/04/2026 | 05/01/2026 | 42d | +10.41% |
| Low PPI | 05/04/2026 | 10/30/2026 | 126d | +3.30% |
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 BLS the processed-foods PPI index Producer Price Index for processed foods and feeds, 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 PPI YoY) = bullish FC a-priori; empirical validation confirms direction. State thresholds plus or minus 0.2 (moderate) and plus or minus 0.5 (extreme). Monthly BLS release cadence.
Why it matters
Why processed-foods PPI reads broader meat and food inflation
BLS PPI the processed-foods PPI index covers processed foods and feeds including meat products, cereals, dairy, and bakery goods at the wholesale producer stage. The YoY change captures the broader meat-and-food inflation cycle. When processed-foods PPI runs hot, the entire nominal meat complex has pricing-power support — feeder cattle included. When it runs cold, nominal meat prices face deflationary drag.
Why Grade B+ with independent-sample confirmation
Daily Spearman IC against FC fwd60d is plus 0.176 at p-value below 1e-63 across 8,989 observations — strongly significant daily. Non-overlapping (every-60-day) independence test at p-value 0.005 across 150 independent samples — INDEPENDENTLY SIGNIFICANT. 2.20 pp directional spread between tails. Clean positive polarity — empirical direction matches a-priori economic logic (high PPI = bullish FC).
How to use this signal today
In the current Low PPI moderate-negative band, modest bearish FC lean. Pair with the FC US Herd Inventory signal, the FC Term Structure Curve signal, the FC Light Placement Pace signal, and the LC-corn ratio signal for stacked confirmation. Processed-foods PPI is a MACRO-INFLATION read, not a structural supply read.
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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 Nov 01, 2026 03:32 PM ET