Feeder Cattle — Commitment of Traders

Feeder Cattle futures trade on the CME in 50,000-pound contracts and represent calves and yearlings being fed for eventual slaughter. The feeder cattle market is driven by corn prices (since feedlot operators are simultaneously buyers of feeder cattle and corn), the cash feeder auction markets in Oklahoma, Kansas, and Texas, and the live cattle futures market that represents their eventual output price. COT positioning in feeder cattle is dominated by commercial hedgers (feedlot operators and calf producers) because the speculative community is smaller than in live cattle or hogs. The relationship between the live cattle-feeder cattle spread and corn prices is the fundamental framework for this market. The COT Index for feeder cattle highlights when speculative positioning is historically extreme, which is useful because when large specs take a position in this less-liquid market, the move tends to be more committed. Weekly changes in the feeder cattle COT track with corn price moves, auction market receipts, and the CME feeder cattle index (physical market benchmark).