Weaned Calf Risk Protection

Regional Factors and Price 

Adjustment Factors

Methodologies

Actuarial and Product Design Division 

Risk Management Agency

United States Department of Agriculture

Published September 2023
The pricing methodology for weaned calves uses factors applied to feeder cattle prices. The factors are 

derived from historical regional calf prices and feeder cattle prices from the futures market. Each projected 

and harvest price will have their own associated factors by region. 

The methodology uses: 1) USDA Agricultural Marketing Service (USDA-AMS) auction price data for the 23

price-determining states to produce a regional-weighted average price series for cattle weighing between 

200 and 750 pounds, and 2) Chicago Mercantile Exchange (CME) prices for feeder cattle. 

The AMS price series consists of daily auction data compiled into weighted average monthly prices for the 

two respective regions. The regions of South Central and North Central correspond to the stated AMS 

regions with the states within a region listed in the Appendix. On occasion, certain values in the price series 

may not be reported. If the data is incomplete in a given year, available information will be used to 

estimate missing values. The data is collected by USDA/State Market News Reporters and released on the 

following web sites:

https://mymarketnews.ams.usda.gov 

https://www.ams.usda.gov/market-news 

The CME Feeder Cattle contract settles against the CME Feeder Cattle Index which was designed to use 

cattle within major feeder cattle producing states in the United States. The index uses steers weighing 

between 700 and 899 pounds, meeting prescribed muscling frame score requirements (Medium & Large 

#1 and Medium & Large #1-2), and not exhibiting predominantly dairy, exotic, or Brahman breeding 

characteristics. Non-US origin cattle are also excluded. The steers must also be publicly reported from 

within the specified twelve feeder cattle producing states: Colorado, Iowa, Kansas, Missouri, Montana, 

Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, and Wyoming. The data is 

collected by USDA/State Market News Reporters and also released on the web sites listed above. 

A regional price relationship is established to account for variations in the price for calves sold in areas that 

are not recorded within the CME Feeder Cattle Index. Additionally, cattle weights that meet the 

specifications of the index are heavier than the calves that will be covered under the program. Thus, a 

standard baseline weight of 650 pounds is used to determine the relationship between the differences in 

weights associated with the futures prices and the AMS data.

The Regional Factor (RF) is calculated by dividing the weighted average price for a 650-pound calf within a 

respective region by the corresponding feeder cattle futures price, noted as:

Regional Factor: RF = �

yRegionPP1

yFuturesPP1

�
Where yRegionPP1

is the regional weighted average price for 650-pound calves, and yFuturesPP1 is the futures 

price during the appropriate discovery period. The factor will be applied to relevant futures prices with 

the price discovery periods using the current methodology to calculate a regional base price yRegBasePP1 . 

The discovery periods will be differentiated by a projected price discovery period and a harvest price 

discovery period, as well as sales closing date.

Regional Base Price: yRegBasePP1= RRRR ∗ yFuturesPP1

Calf prices depend on the weight of the cattle with lightweight calves typically having the highest price per 

pound and lower prices for heavier calves. This relationship is commonly referred to as a price slide and is 

a measure of the amount of price adjustment as weight changes from a base weight. Price slides depend 

on the price level and thus are more accurately stated as a percent of the base price which adjusts

appropriately to changing market prices.

Therefore, a Price Adjustment Factor will be applied to the previously mentioned regional base price. The 

Price Adjustment Factor will allow for differences in weight to be accounted for around the 650-pound

base weight. 

To determine a Price Adjustment Factor, a differential, y�RegD1, is calculated by taking the ratio of the 

maximum AMS regional price for the 300, 350, and 400-pound weight increments and the regional price 

for a 650-pound calf, subtracting one, and dividing by the difference. This is the price adjustment on a perpound basis. To reflect this adjustment as a percent of price, the weight differential is divided by the 

regional base price yRegBasePP1

 determined during the price discovery period.

Weight Differential: y�RegD1 = �

�

yyRRRRRRRRRRRR(300−400)1

yReg650PP1

� − 1

(650 − 300)

� �

Price Adjustment Factor: y�RegPAF1 = �

 y�RegD1 yRegBasePP1

� �
Appendix

List of States in Each Region

South Central (SC)

Texas

North Central (NC)

Colorado, Nebraska, and South Dakota

Price Determining States by AMS Region

Data from the twenty-three states below are utilized for determining projected and harvest prices for 

weaned calves in the specified AMS National Feeder and Stocker Cattle Summary report regions.