Beef economist expects near-record profitability in 2014

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Limited cattle supplies will keep cattle prices high next year, and a beef economist says high domestic beef demand and improving global opportunities are just a few reasons to expect near record-high profitability.

Cattle Scott Brown, University of Missouri beef economist, said the forecast for the cattle market over the next two years compares to the “golden era” of beef profits in 2004. Brown presented his outlook to producers at the annual Missouri Forage and Grassland Conference at Port Arrowhead at Lake Ozark earlier this month.

In addition to high cattle prices and low feed costs, demand in the U.S. and global markets is improving.

“International trade has been important. It’s really a bright spot when you look ahead for 2014,” Brown said. “So not only do we expect domestic demand for beef to be better as we look ahead to 2014, but the ability to move product into places like Japan, South Korea and China does nothing but continue to help us on the price side.”

His forecast was supportive for the industry, especially cow-calf producers.

His charts showed a sharp rise in live-cattle futures prices since 2010, from $80 per hundred to $135. Cattle supplies falling to a 61-year low has moved cow-calf returns from minus $25 per cow in 2009 to plus $25 in 2012. Brown told the group those returns could skyrocket to $300 per cow next year based on estimates from the Livestock Market Information Center.

Beef prices continue to improve and are expected to move an additional two or three percent higher next year, but the trend could change if consumers turn to pork and poultry as less expensive meat options. A rebounding economy and more disposable income will help keep beef on dinner tables across the country.

The outlook for 2014 and beyond is much more positive than the last four or five years, but profits could be affected if we face another unexpected drought.

“All bets are off if there is a drought in 2014.”

Brown added the expected profits in the cattle industry could benefit rural economies. As the money comes back to producers they’ll spend those dollars within their communities.

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Gary Fike    
Manhattan, KS  |  November, 19, 2013 at 03:49 PM

Everybody is predicting high prices; I have no doubt of that. My question is for the profitability end of the equation. Feed prices are lower, but feeder cattle prices are sky high. right now, a little money is being made in the feedlot sector, albeit with lower priced calves than what we have today. The cow- calf man looks to be in the driver's seat; the feedlot folks, maybe not so much if the "in" price on cattle stays at today's level or moves higher. Another factor not explained is domestic per capita beef disappearance. One would expect the domestic market to be steady or shrink slightly, but the export market should grow. Interesting dynamics in today's industry!

Kansas  |  November, 20, 2013 at 07:20 AM

Lowest numbers, consumer demand is high with USA Beef and producers have never seen higher prices. Then comes the negative news, the import equation "to fill our needs here in the USA". It is entirely wrong but the packers are building in foreign countries with plans of bringing in cattle and more beef (high risk BSE known countries). The relaxation of our prevention measures has been going south by the lack of leadership. Go figure! And some dummies will still support the organizations and politicians who accept it as "normal business to get trade abroad". It is all a BIG LIE! We need the USA consumer who has money and can afford to buy what they want! As I told Kansas Senator Pat Roberts (he is bought and paid for in D.C., follow his record of voting)in a town hall meeting when he jested sarcastically about COOL, I told him to go sell his beef in Haiti and see what it is worth. I'll take my chances on USA consumers.

joe butterweck    
fresno calif  |  December, 30, 2013 at 12:38 PM

I agree with the last 2 comments, Then we have to look at sustainability too. When one looks at the whole industry, breeding to retail, things are not that positive in US/Canada. Especially red meats. How long can we expect to live off other parts of the industry disasters? $2 barley wont last that long. Do you see people going into the cow calf industry> I just see we old timers hanging on for awhile longer?

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