01/30/06 Cattle inventory up two percent

American Rancher January 30, 2006 USDA's semi annual Cattle Inventory report issued Friday showed an increase in the number of cattle in all categories. Agriculture Department economist Ron Gustafson says this is the first time in a number of years that the cattle industry is expanding. Gustafson: "Inventory is up about two percent from a year ago. Calf crop is up about one percent so we continue to build our base. A lot of the increase so far is from sharply reduced cow slaughter. We are seeing a little bit more of an increase in heifer retention. A lot more we will see have an impact when the heifers in the inventory of January 1 of this year being held for replacement, begin to calf. So basically as we move out into 2007 we are going to see a bit more of an increase." Even with an increased inventory Gustafson says high cattle prices should remain due to high consumer demand. Gustafson: "Supplies are very tight at this time. As we begin to inventories expand and production increase we are going to see prices coming down but from near record levels. So the industry looks pretty strong at this point." He says probably the major concern is the drought conditions in the southern Great Plains, the heart of the U.S. beef cattle industry. The total U.S. cattle inventory as of January 1st was put on 97.1 million head. I'm Bob Hoff.