Thanks for the link to the PDF. I used CME credit ratios to choose the 3:2 one: http://www.cmegroup.com/clearing/margins/inters.html#e=CME&a=AGRICULTURE&p=FC. It is true that this spread was ill conceived considering the expiries I chose. I later read the the CME pdf and discovered a more proper way to trade cattle feeding spreads. Anyway, I didn't check but I don't think any other ratio or expiry choice would have transformed it into a winning trade. This strength of feeders relative to cattle was just counterseasonal.
http://www.ksre.ksu.edu/ best site to learn more about cattles. But, higher education will master u in trading the cattles and grain spread
well you take a 750-pound critter. he gains 3.5 pounds/day on average. make him weigh 1300 lbs. so that animal would be on feed 60-120-150 days roughly. depend on the weather. 1/2/4 1 corn + 2 FC = 4 LC in a crush 2/4/8 1/2/4 CZ+FCQ=LCZ or LCG probably die in January most likely a lot of cattle are gaining 4+ pounds per day. better breeding over the years
CME website says 5-2-4 :http://www.cmegroup.com/clearing/margins/inters.html#e=CME&a=AGRICULTURE&p=FC, but the ratios on the website usually makes no sense. Perhaps they are talking about 5 mini-corns??? Anyway, yours makes a lot more sense. Another CME pdf was talking about 1-1-2.
I bought a 3 LC V2 / 2 FC K2 spread and broker charged me 3600 usd margin. Outright FC margin is 2025 usd and LC margin as 1620. This corresponds to nearly 60% margin credit.