Two years ago, most market experts thought the cattle business was headed into a multi-year expansion cycle, after several years of good prices and profits. But that expansion was blindsided primarily by two things, according to today's reports: weather, and ethanol.

The weather issue has been prolonged drought in key cow/calf areas. First it was the southern Plains, and now its the southeastern states, where 25% of the nation's beef cow herd is located.

The ethanol issue has worked a double-whammy on cattle herds. Increasing corn/feed costs have pushed the total cost to produce a fed steer up by $150 in the last two years, and pasture lands are being converted to row-crop acres in response to high grain prices.

Kevin Good of Cattle Fax listed several other factors that are negative to growth of the nation's beef herd: escalating land values don't favor pastures and forage production; urban sprawl and recreational land use discourage livestock production; government policy towards federal land use has discouraged grazing; and the average age of producers is increasing.

Source: Agriculture Online