Feeders are the young animals a feedlot buys and fattens. Because sourcing and delivering live calves to a standard specification is impractical, the contract settles in cash against the CME Feeder Cattle Index, a seven-day weighted average of actual auction sales.
Feeder prices move inversely to corn-futures: cheap corn means feedlots can afford to pay more for calves, so a grain rally is a headwind for feeders even when beef demand is strong.
Example: feeders at $250 per cwt on a 50,000-pound contract is 250 x 500 = $125,000, the largest notional in the livestock complex. A $1 move is $500 per contract.
Related: live-cattle-futures, cattle-crush-spread, corn-futures, cash-settlement, cattle-on-feed-report