· Analytic
Z6635 FC Corn-Belt Drought Signal
USDM county Drought Severity and Coverage Index for Iowa, Illinois, and Nebraska z-scored on 5 years as a Grade B directional signal with marginal independent-sample significance on CME Feeder Cattle forward returns.
At a glance
Current reading
-0.838
Wet extreme-negative firing, 96d running
Signal state
Extreme NEG
phase -1, DSCI deeply below baseline
Sample
Daily CME, 26-year span
USDM county DSCI IA+IL+NE, 2000+
Daily IC
+0.127 (p < 1e-24)
Spearman vs FC fwd60d, n = 6,691
Non-overlap IC
+0.143 (p = 0.133)
Every-60d, n = 112, MARGINAL
Baseline FC fwd60d
+1.60%
Unconditional mean (live window)
As of Oct 30, 2026. Updated nightly.
OBJECTIVE
The US Drought Monitor (USDM) publishes weekly Drought Severity and Coverage Index (DSCI) readings for every US county. For the three core corn-belt states — Iowa, Illinois, and Nebraska — DSCI captures the fraction of pasture, rangeland, and cropland area under drought stress on a 0-500 scale. The empirical mechanism: when corn-belt DSCI runs high (drought firing), two cross-currents hit the feeder-cattle market. The longer-horizon corn-cost pass-through is bearish FC (drought in corn country raises feed cost and compresses feedlot margins). But the shorter-horizon forced-placement dynamic is bullish FC (drought in cow-calf country forces placement of lighter calves, tightening near-term feeder supply). The 60-day forward window captures the near-term forced-placement effect more than the longer corn pass-through. This signal reads USDM county DSCI for Iowa (FIPS 19), Illinois (FIPS 17), and Nebraska (FIPS 31), averaged across counties, z-scored on a 5-year daily rolling window. Positive composite = drought firing above 5-year baseline = near-term bullish FC via forced-placement supply tightening. The honest grade: Daily Spearman IC against FC fwd60d is plus 0.127 at p-value below 1e-24 across 6,691 trading days — strongly significant daily. Non-overlapping (every-60-day) IC is plus 0.143 at p-value 0.133 across 112 independent samples — MARGINAL (fails the standard 0.05 significance bar). Phase +1 (Drought Firing) delivers +2.22 percent fwd60d (+0.62 pp above baseline, hit 61 percent). Phase -1 (Wet) delivers -0.12 percent (-1.73 pp below baseline, hit 49 percent). Current reading: Wet extreme-negative firing at composite minus 0.838, 96 trading days running. Corn-belt DSCI is deeply below the 5-year baseline. Modest bearish-FC lean per the empirical direction.
LIVE CHART
FC Corn-Belt Drought Signal
Composite reads minus 0.838 as of October 30, 2026, in the Wet extreme-negative band. USDM county DSCI across IA+IL+NE is deeply below the 5-year baseline. CME Feeder Cattle (orange) has traded in the \$330-340 range.
COMPOSITE
-0.838 / tanh
STATE
Wet Ex
PHASE
-1
DAILY IC
+0.127 (p < 1e-24)
INDEPENDENCE
p = 0.133 (marginal)
TODAY’S PLAYBOOK READING
STATE
Extreme Neg
STATE AND HISTORY
Wet extreme-negative firing at composite -0.838, 96 trading days running. Phase +1 (Drought firing) historically delivers +2.22 percent fwd60d / 61 percent hit / +0.62 pp above baseline. Phase -1 (Wet) delivers -0.12 percent / 49 percent hit / -1.73 pp below baseline. Daily IC +0.127 at p-value below 1e-24. Independence test at p-value 0.133 across 112 non-overlapping samples — MARGINAL.
THE DROUGHT MECHANISM
Corn-belt drought creates two cross-currents on FC. Longer-horizon corn-cost pass-through is bearish FC. Shorter-horizon forced-placement (lighter calves to feedlots) is bullish FC near-term. The 60-day forward window captures the forced-placement effect more than the corn pass-through.
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, and the FC Northern SNOTEL SWE signal (water-supply cousin). In the current Wet band, modest bearish lean near-term.
WHAT THE CHART SHOWS
The composite sits at minus 0.838 in the Wet extreme-negative band. The blue signal line has moved below the minus 0.5 extreme threshold as USDM DSCI across IA+IL+NE has moved deeply below the 5-year baseline. CME Feeder Cattle (orange) has traded in the \$330-340 range.
TOP INPUTS FIRING
- Primary composite -0.838 State Wet extreme-negative firing, 96 days running.
- USDM county DSCI deeply below baseline Averaged DSCI across Iowa, Illinois, and Nebraska is in the lowest percentile of the 5-year distribution. Wet corn-belt conditions.
- Marginal non-overlap IC – supportive evidence Daily IC +0.127 at p-value below 1e-24. Non-overlap IC p-value 0.133 MARGINAL (fails strict 0.05 bar).
THE TAKEAWAY
What this means for you today
THE DROUGHT CALL
Composite -0.838, Wet extreme-negative. Corn-belt DSCI (IA+IL+NE) is deeply below the 5-year baseline — wet conditions across the primary corn-belt cattle region.
THE EMPIRICAL CONTEXT
Phase -1 historical fwd60d FC mean -0.12 percent (-1.73 pp vs baseline, hit 49 percent). Modest bearish lean. Phase +1 (Drought) is the strongly-bullish band at +0.62 pp above baseline.
THE HONEST CAVEAT
Daily IC +0.127 at p-value below 1e-24 strongly significant. Non-overlap p-value 0.133 MARGINAL (fails strict 0.05 bar). Grade B directional, supportive-but-not-standalone evidence.
THE REGIME MAP
The three states, forward returns and sample share
Computed from 6,691 trading days using RUN-ENTRY sampling. Baseline FC fwd60d: plus 1.60 percent. Grade B directional with MARGINAL independent-sample significance (non-overlap p=0.133 fails strict 0.05 bar).
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Drought Firing | +1 | 28.1% (2612 d) | +4.05% | +2.84pp | Feb 2026, Feb 2025, Oct 2024 | |
| Normal | 0 | 39.1% (3641 d) | +3.61% | +2.39pp | May 2026, Apr 2026, Oct 2025 | |
| Wet TODAY | -1 | 32.8% (3048 d) | +2.97% | +1.75pp | Jun 2026, Apr 2026, Jun 2025 |
The historical pattern
Signature episodes in the 26-year sample
THE TRACK RECORD
State changes
| State | Start | End | Duration | Fwd 60d FC |
|---|---|---|---|---|
| Drought Firing | 10/30/2024 | 01/06/2025 | 46d | +3.76% |
| Normal | 01/07/2025 | 02/03/2025 | 19d | -14.16% |
| Drought Firing | 02/04/2025 | 03/24/2025 | 34d | -7.20% |
| Normal | 03/25/2025 | 04/28/2025 | 24d | +3.27% |
| Wet | 04/29/2025 | 05/12/2025 | 10d | +14.93% |
| Normal | 05/13/2025 | 06/16/2025 | 24d | +8.58% |
| Wet | 06/17/2025 | 10/06/2025 | 77d | +10.02% |
| Normal | 10/07/2025 | 02/09/2026 | 86d | +2.10% |
| Drought Firing | 02/10/2026 | 04/13/2026 | 43d | +5.70% |
| Normal | 04/14/2026 | 04/27/2026 | 10d | +8.71% |
| Wet | 04/28/2026 | 05/11/2026 | 10d | +3.83% |
| Normal | 05/12/2026 | 06/15/2026 | 24d | +4.75% |
| Wet | 06/16/2026 | 10/30/2026 | 96d | +1.86% |
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 USDM county DSCI daily readings for Iowa (FIPS 19), Illinois (FIPS 17), and Nebraska (FIPS 31), averages across all counties in those states, z-scores on a 5-year rolling window with 252-day minimum sample, clips to [-3, +3], tanh-bounded. State thresholds plus or minus 0.2 (moderate) and plus or minus 0.5 (extreme). Weekly USDM release ffilled to daily.
Why it matters
Why USDM DSCI reads corn-belt drought
The US Drought Monitor is the federal interagency drought intensity map published weekly by the National Drought Mitigation Center. The DSCI (Drought Severity and Coverage Index) collapses the five drought-intensity classes (D0-D4) into a single 0-500 scale per county. For Iowa, Illinois, and Nebraska — the three core corn-belt states — DSCI captures the fraction of pasture, rangeland, and cropland area under drought stress.
Why Grade B with marginal independent-sample confirmation
Daily Spearman IC against FC fwd60d is plus 0.127 at p-value below 1e-24 across 6,691 observations — strongly significant daily. Non-overlapping (every-60-day) independence test at p-value 0.133 across 112 independent samples — MARGINAL (fails standard 0.05 bar). The signal has 26 years of history (2000+) which provides 112 non-overlap observations.
How to use this signal today
In the current Wet extreme-negative band, modest bearish FC lean near-term. Pair with the FC US Herd Inventory signal, the FC Light Placement Pace signal, and the FC Northern SNOTEL SWE signal. This is a corn-belt drought signal; SNOTEL is Mountain-West water supply — different geographies, complementary coverage.
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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 06:27 PM ET