CME Group live cattle and feeder cattle futures market prices have been quite volatile. Futures markets try to anticipate what the cash market will be in the future.

Cattle cash and futures prices have been trading at record high levels in 2026 due to lower cattle and beef supplies and relatively strong demand. When futures prices are record high, volatility is also usually high, because there are many fundamental supply and demand factors that can affect the market.

Cattle and beef supply factors are well documented, with 2025 being the seventh straight year of beef cow liquidation causing smaller calf crops and declining beef production. Lower supplies are supportive to prices.

Beef demand has been strong, as consumers become more protein driven. But there are many factors that are causing enough uncertainty to cause the futures market to be much more volatile than the resilient cash cattle market.

Some factors causing futures market volatility include record high retail beef prices, the uncertainty in the war with Iran (especially causing higher gas prices that affect consumers’ budgets), the President’s comments about lowering retail beef prices with increased beef imports, foreign and U.S. stock market volatility, the Mexican border closure to cattle imports due to New World screwworm, beef packing plant closures and labor strikes, tariff and trade agreements negotiations, managed money funds entering or exiting cattle futures markets,  beef export market headwinds, and weather that affects forage and feed grains production and prices.

That being said, arbitrage causes futures and cash markets to be the same at futures market contract maturity. Since there are many weights and grades of calves and feeder cattle marketed at many markets throughout the United States, what is the cash market that the feeder cattle futures market is attempting to anticipate?

The answer is the CME Feeder Cattle Index (Index). Since CME Group feeder cattle futures contracts are cash-settled rather than by actual delivery of cattle to a physical site, all open contracts after termination of trading on the last Thursday of the contract month are settled with the Index. The Index is based on feeder cattle auction, direct trade, video sale, and internet sale transactions within the 12-state region of Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming. The number of cattle and weighted average price and weighted average weight are reported by the USDA Agricultural Marketing Service (AMS). 

Individual market reports are available on the AMS website at: www.ams.usda.gov/market-news/livestock-poultry-grain#cattle.

The feeder cattle weights and USDA grades included in the Index are 700 to 899 pound (lb.) Medium and Large Frame #1 feeder steers, and 700 to 899 lb., Medium and Large and Large Frame #1-2 feeder steers. Feeder cattle identified as having predominately dairy, exotic or Brahman breeding and cattle from an origin outside the United States are excluded.

A detailed description of the Index specifications is available in the CME feeder cattle rulebook at: www.cmegroup.com/rulebook/CME.

The Index is a seven-day weighted average defined as the total dollars sold divided by the total pounds of eligible feeder steers sold. Each market day the CME posts the Index price at: www.cmegroup.com/market-data/reports/cash-settled-commodity-index-prices.html. The Index is also important for calf and feeder cattle producers who use USDA Risk Management Agency Livestock Risk Protection (LRP) insurance. USDA uses the Index price to determine the “Actual End Value” for calf and feeder cattle LRP insurance policies.

The 600 to 1,000 lb. feeder steer and 100 to 599 lb. heifer calf contracts actual ending values are the Index price. The 100 to 599 lb. steer contracts receive a 10% premium and the 600 to 1,000 lb. heifer contracts receive a 10% discount.  

Editor’s note: Tim Petry is a livestock marketing economist with the North Dakota State University Extension Service.