Catching Chocobos
Obtaining Chocobo Lure: There are two Chocobo Lure materia. The first is offered to you on disc 1 for 2,000 gil, if you do not buy it on disc 1 then you won't get a second chance later in the game. By then, the second Chocobo Lure should be available, it's found sitting on the ground at the chocobo farm, far lower-right corner, in front of the pen.
Once you've rented some stalls, find a chocobo by equipping the Chocobo Lure and running around on the chocobo tracks until one appears in a random encounter. The encounter setup (ie. what enemies appear with the chocobo) determines their rating. Gender is randomly assigned when you move them from a pen into a stall, you can save beforehand and keep reloading to get a specific gender.
To catch the chocobo, you need to defeat all enemies without the chocobo running away. To stop it from running, use greens for varying effect.
Gyshal, Tantal, Curiel Greens: Keep the chocobo busy for some turns. More expensive = better.
Krakka, Pahsana Greens: Reduce the chance of the chocobo running away. Again, expensive is good.
Reagan Greens: Ultimate catching greens, keeps the chocobo busy for many turns and strongly reduces the chance of it running away.
Mimett and Sylkis Greens only keep the chocobo busy for a single turn. Use them for enabling the Chocobuckle E.Skill counter, not catching chocobos.
Generally, you shouldn't need Reagan Greens. Curiel Greens should keep the chocobo busy for more than enough time to finish off the enemies, if your party is strong even Gyshal Greens will do.
An alternative to all this mucking around with greens is to just cast Odin. Steel Bladed Sword will (hopefully) hit and kill the enemies while missing the chocobo, and it will count as captured.
Once you have the chocobo, use the Cancel button to get off and it will ask if you want to send it to the farm. Do so.
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Breeding the Special Chocobos
What You Need:
3 types of chocobos are involved: Good, Great, and Wonderful. You'll want two Good/Great chocobos, it's preferable that they're both Great. You will also need one Wonderful chocobo.
Good: Gold Saucer area, appears with 2 Spencers
Great: Mideel area, appears with 1 or 2 Spirals
Wonderful: Icicle area, appears with 1 or 2 Jumpings
Nuts. Get 3 Carob Nuts; these can be stolen from Vlakarados, fought on the grasslands around Bone Village. Get a single Zeio Nut; these are both won and stolen from Goblins, found in the forests of Goblin Island, which is to the north-east of Midgar / far-east from Bone Village. If you think you're going to be breeding more than required, get more, but save before breeding and you can keep resetting until you get what you want.
Greens. Best greens for feeding are, typically, the most expensive: Sylkis Greens from the Chocobo Sage, 5,000 gil each. You need as many as it will take to win at the races, but you don't need to win much - in fact, you can have optimal chances without racing a single chocobo to S class.
River / Mountain
First off: you can not tip the odds of getting either a mountain of a river chocobo. Any given good/great combination has an even chance of getting a river or mountain chocobo. All those guides that tell you to use a great male and good female for one then good male and great female for the other, or those that tell you the parents should automatically spit out the opposite colour the second time you mate them, are wrong.
Breed a good/great with a second good/great, using a Carob Nut. Without racing, you have an approx. 27% chance of a River chocobo, 27% chance of a Mountain chocobo, 46% chance of a regular chocobo. If the parent's have a combined total of at least 4 racing wins, you have a 50% of River, 50% of Mountain, and no chance of getting a regular.
Note that it's the first good/great you select that matters; if you really want, you can select a non-good/great as the second chocobo. However, there's only a 25% chance it will work, after which it goes to the above chances of getting a special.
Get both a Blue and Green chocobo of opposite genders. They can be from the same or different parents, it doesn't matter. You can even use the first Blue/Green you get to breed the second, as they will be considered good/great themselves. Getting both the Blue and Green is the frustrating part of chocobo breeding, and really the only frustrating part. Once you've got them, the rest is easy.
Black
Breed the Blue and Green chocobos together with a Carob Nut. By default, you have a 10/256 chance of getting a Black, 128/256 of getting a Blue, 118/256 of getting a Green. If the parents have a combined total of 9 or more wins, the result should automatically be a Black chocobo.
It's possible to get a Black chocobo using the basic nuts too, only the Zeio Nut cannot produce a Black. However, you won't get an automatic Black from higher race wins when using other nuts, and the chance of getting a Black varies.
Gold
Breed the Black chocobo with a wonderful chocobo, using a Zeio Nut. By default, you only have a 1/32 chance of getting a Gold; have the parent's combined total wins equal 12 or more for an automatic Gold chocobo. Make sure you select the Black chocobo first, due to a bug you cannot get a Gold if you select the Wonderful first.
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Frequently Asked Questions
When can I start breeding chocobos?
You can rent stalls, and with them keep & breed chocobos, from when you obtain the Highwind. However, you cannot race chocobos until the Gold Saucer re-opens, which is a short time later, after the lifestream incident. You can breed chocobos without racing them, but racing will greatly improve the chance of getting a special chocobo.
How can I take my chocobo on the Highwind?
While riding the chocobo, use the Confirm button to enter the Highwind as usual. Only chocobos you have moved into a stall and named can be taken on the Highwind, wild chocobos can find their own way to the farm.
I asked Choco Billy to move my chocobo, but nothing happened!
This bug is caused by using a custom control configuration, use the default controls when managing chocobos.
My chocobos are "too young" or "just mated", when can I breed them again?
The time a chocobo takes to be ready for breeding isn't measured by time at all, it's battles that count. It takes from 3 to 18 for a newborn to mature, and 3 to 10 for a parent to mate again.
Do I need to feed the parents to produce a good/special chocobo?
No. Feeding the parents will not help the offspring directly, but it only affects their racing ability, which will help them boosting the chance of getting a special chocobo. The offspring's stats are based on their parent's max stats, so neither feeding or racing the parent's will improve their ability.
I keep getting <insert unwanted colour or gender here> chocobos, what's going on?!
It's possible for the game to use the same random generator seed each time you reload the game, which means you get the same result every time you attempt to breed. In short: if you reload 10 times in a row and keep getting the same thing, you're probably going to keep getting the same result as long as you keep doing things exactly the same. Before attempting again, do something different, simpliest option is to leave and re-enter the chocobo ranch, a few times if neccessary. That should clear the random seed, giving you a fresh chance.
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Big thanks to Terence, who has established the full mechanics behind all this choco business.