The good news of 2013 is that the fourth quarter saw feedlots become profitable again. The bad news is that this profitability was preceded by two years of near-record losses. However, as 2013 ended, prices for all segments of the livestock industry were at record levels.

Of course, a major 2013 event was the voluntary removal of Zilmax® from the marketplace. Speculation and study concerning its impact on the fed cattle industry is underway.

The large 2013 corn crop and subsequent reduction in corn prices by almost 40% was welcome news to the industry. Lower feed prices and fewer calves resulted in calf prices of $2/cwt. and higher, while yearlings reached $1.70/cwt. or more. Other good news is that beef cow expansion appears to be underway, and prices for bred heifers and cows are in the breathtaking range of $2,000 to $3,000/head.

In 2014, the consumer will likely tell us how much higher fed cattle prices can go. Heifer retention for breeding and a lower cow kill are bullish market factors, while competition from poultry and pork are negative factors.

A big potential change in 2014 could be the expansion of feedlot confinement and semi-confinement of bred heifers and cows. In 2000, beef cow numbers were 33.57 million head, compared with 29.3 million in 2013. If these 4 million cows were replaced, a substantial number could be maintained in feedlots, which would help solve that sector’s capacity problem. If cattlemen can think outside the box, today’s higher bred cow and heifer prices, lower feed prices and shortage of pasture could provide such a confinement system with good profit potential.

My biggest 2014 concern is that an unexpected event for which we are unprepared will blindside us.