Feeder Cattle Trading Strategy (Backtest and Futures Insight)

The global cattle market is worth hundreds of billions of dollars, as the world consumes over 60 million metric tons of beef annually. Feeder cattle (young cattle mature enough for fattening) contribute a good chunk of that market. Despite the huge market, there are fewer speculators trading cattle compared to other commodities, as many of the participants are industry stakeholders trying to hedge against exposures to risk. If you want to play the feeder cattle market, you will need a robust feeder cattle futures strategy. What is it?

Feeder cattle futures are a financial derivative product that represents a contract to buy or sell a specified number of feeder cattle on a future date, at a pre-agreed price. The contract trades on the CME Globex platform and is financially settled. A feeder cattle futures strategy refers to the methodologies and techniques you can use to profitably trade the market. The strategy includes technical and fundamental analyses required to find entry and exit signals, as well as risk management methods.

In this post, we answer some questions about the feeder cattle futures strategy and we also make a backtest.

What are Feeder Cattle futures?

Feeder cattle refers to weaned calves grazing pasture, which are of sufficient weight and maturity to undergo backgrounding or be fattened in preparation for slaughter. The young cattle are placed on high-energy rations for finishing. Feeder cattle futures make up a huge part of the cattle market, which is why you might want to include it in your watchlist.

Feeder cattle futures refer to a financial derivative product that represents a contract to buy or sell a specified number of feeder cattle on a future date, at a pre-agreed price. The contract trades on the CME Globex platform and is financially settled. Feeder cattle futures are mostly traders by industry stakeholders who use it to hedge their risk exposure in the market, but it also provides traders with an opportunity to profit from speculating on price fluctuations.

What is a Feeder Cattle futures strategy?

A feeder cattle futures strategy refers to the methodologies and techniques you can use to profitably trade the market. The strategy includes technical and fundamental analyses for market timing. It also includes position sizing and other risk management methods.

It is important to have a robust trading strategy if you want to trade futures with any success. The strategy must have precise entry and exit signals and risk management methods.

Feeder Cattle futures strategy backtest

A backtest with strict trading rules, settings, statistics, and historical performance is coming soon.

What is the seasonality of Feeder Cattle futures?

Seasonality refers to the tendency of the price of an asset to move in a particular way during a certain period of the year, which can be months or seasons, such as spring and summer.

The feeder cattle market tends to rise more consistently during the Spring and Summer seasons and perform poorly during the fall and winter seasons.