The U.S. Department of Agriculture released the annual cattle report in late January with data showing the direction of the cattle industry and helping to predict long-run cattle supplies.

The USDA reported that cattle numbers are down 1 percent to 96.1 million animals nationwide. The number of beef cows also declined 1 percent, while the number of dairy cows was slightly up. The number of cattle on feed - an indicator of beef supply over the next two to six months - was down 7 percent.

"The report confirms that Kentucky continues to hold its distinction as the state with the largest number of cattle east of the Mississippi River," said Lee Meyer, University of Kentucky agricultural economist. "Our 2.4 million cattle make us the 12th largest cattle state in the U.S."

Kentucky ranks 10th in all cow numbers, and eighth in beef cow numbers with 1,120,000 beef cows - up 4 percent from last year. As for dairy cows, Kentucky's numbers declined 4 percent since last year and the state ranks 18th.

Meyer said that based on his analysis of the USDA report, he sees the cattle industry slowly entering the expansion phase of the cattle cycle. The cycle is a 10- to 13-year pattern of swings in cattle numbers. While the numbers of "all cattle" and "beef cows" are down 1 percent, the number of beef cow replacements is up 1 percent, he said.

"The number of heifers expected to calve this year is up 3 percent," he added. "Ifthis pattern holds, it is possible that beef supplies could begin to increase in 2004, but the more likely situation if for supply increases to occur in 2005."

For various reasons, Meyer believes the cow industry is modestly shifting to the Southeast.

"The region gained 107,000 cows over the past year," he said. "While not all states in the Southeast reported more cows, Georgia, Kentucky and Tennessee had increases of 4 to 5 percent."

At the same time, Western states that were stricken by drought lost cows last year. Colorado, Montana, North Dakota and South Dakota reduced cow numbers by a total of 270,000 head.

"Kentucky's average cow herd size has increased to 29 head (up from 28 last year) on its 39,000 farms with beef cows," Meyer said. "About 86 percent of those operations have fewer than 50 head, however 10 percent have 50 to 99 cows, and 4 percent have 100 to 499 cows."

Three-fourths of Kentucky's cows are on farms with fewer than 100 head.

The full cattle report is available on the USDA's web site: click here