As corn prices fell to a three-year low and improved rainfall produced much needed hay and forage this fall, cattle prices surged. Since May feeder cattle prices saw a 25%-30% increase driving the feeder cattle index for 750 pound steers to $165 per cwt. Additionally after two years of negative margins feedlot operators began seeing profits this fall. Average profits of $123 per head were being realized in the first week of November compared to the $32 per head being lost last year, and average feed costs per head were $172 lower in November 2013 than in November 2012. On January 1, 2013 inventory of beef cows was the lowest in 60 years and analysts forecast inventories will be even lower on January 1, 2014 – the eighth consecutive year of declining number indicating a strong market for 2014. For exports, the U.S. Meat Export Federation states that in the first eight months of 2013 beef exports were up 1% in volume to 767,017 metric tons and up 10% in value to $4.01 billion. Unforeseen as of yet is the effect that increased retail prices will have upon consumer buying habits which may dampen this rally to an extent.
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