Feeder Cattle

The weaned calf contract that prices ranching before the feedyard.

Overview

CME feeder futures settle against an index of 700 to 899 pound calves in 50,000 pound contracts, and the spread between feeder and fed prices is the feedyard margin, triangulated by corn. Calf supply follows the cow herd with a lag, drought tightens it, and pasture conditions set the background trade. Ranchers use the contracts to forward price calves before sale barn day, and local basis tracks auction premiums. Volatility is high because a young animal carries weather, disease, and feed risk for months, and the contract is famous for limit moves when the cattle on feed report surprises the trade.