How Indexes Like RTI and CME Feeder Cattle Index Can Create a Distorted Market View

Indexes like the RTI (Real-Time Index) and the CME Feeder Cattle Index are widely used to track market trends, but their methodology can sometimes create a distorted perception of market strength or weakness, particularly in rolling calculations.

Friday Replaces Friday – Understanding Index Movement

Indexes update by replacing the oldest day with the newest corresponding day, typically Friday replacing the prior Friday in rolling calculations. This means that even if the most recent Friday price was the highest in five days, the index may still decline if the previous Friday had an even higher price.

Example Breakdown

Using the National Steer Price data:

• Friday, 01/31/2025, had one of the highest prices of the week at $285.31.
• However, because it replaced Friday, 01/24/2025, which was even higher at $286.13, the rolling index might show a decline despite the week showing overall strength.
• This can make it seem like the market is weakening when in reality, recent daily prices are climbing, just not exceeding the previous week's comparison point.

Why This Matters for Market Perception

This indexing effect can sometimes lead to misinterpretations of market direction:

• A declining index might not mean the market is weakening—it could just be reflecting a shift in the rolling window.
• Similarly, an increasing index doesn’t always mean prices are surging—it could be replacing a lower price from a prior week.
• This is particularly important for producers, traders, and buyers who rely on these indexes for decisions, as they need to look beyond the raw number and evaluate broader price patterns.