Cattle Cycle on Downturn

Declines in every beef category in Friday's USDA cattle inventory report.

After looking at Friday's cattle inventory report USDA livestock analyst Shayle Shagam says the U.S. is looking at a smaller cattle herd in 2008.

"The number of beef cows was down about 1%," Shagam says. "A very interesting fact to look at though is the fact that heifers 500 pounds and over for beef cow replacement are going to be down about 4%."

According to Shagam there are a few reasons that there are so few replacement heifers.

"One is tight hay supplies, which have increased the cost of over wintering some of these animals; of keeping these animals on pasture," Shagam says. "We also have had continued drought in the Southeast, which is limiting the incentives for producers to hold on to cow as well, despite the fact that there have been relatively good feeder calf prices recently."

Even though prices for cattle should remain good, Shagam says the rise in the cost of inputs is going to make it tougher for everyone in the cattle business, especially feedlots.

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