Cattle market prices for 2014 should remain fundamentally strong and average 5 to 8 percent higher than this year, according to the latest U. S. Beef Cattle Situation and Price Outlook from Auburn University Extension Economist Walt Prevatt.

“As should be expected, the 2014 cattle market has the potential for some big price swings. Abrupt changes in several factors could add much volatility to 2014 cattle market prices.

 

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“Cattle farmers will need to search for ways to lower their unit cost of production — what it costs to produce a pound of beef — and ways to enhance market prices in order to achieve and enhance profitability during 2014,” says Prevatt.

A few of these factors include the growth of the U.S. economy, high levels of unemployment, level of consumer confidence, political gridlock and chaos at all levels of government, an upcoming U.S. congressional election, and various and sundry other issues, he says.

“There is little wonder why future economic uncertainty is fresh in the minds of many U.S. citizens. The decisions made on these issues are believed to have an overwhelming affect on business and consumer spending and our future prosperity,” says Prevatt.

U.S. cattle farmers are continuing to decrease their inventory of cattle and calves, says Prevatt.

 

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The major factors responsible for causing cattle inventory declines include a combination of high production costs (feed, fertilizer, fuel, labor, land rents, etc.), lower levels of profitability for many farmers, larger levels of competing meats, and alternative uses of land (pasture acreage moving into grain production and/or conservation programs and other non-farm uses such as recreation and rural non-farm development) and weather.

“Thus, given the current lackluster level of profits and immense uncertainty in the U.S. general economy, cattle farmers will likely continue to liquidate cattle numbers until profitability can be achieved at a level commensurate with the level of risk incurred and more stable economic conditions are realized,” he says.

In the Jan. 1, 2013 Cattle Report, cattle farmers told USDA they had about 863,000 fewer beef cows that had calved (-2.9 percent) than a year ago. Beef cow numbers were 29.3 million head.