"The last few years, time has usually saved you if you're a margin operator (feeder or stocker), now it will be against you," says Derrell Peel, Oklahoma State University Extension livestock marketing specialist. "There's no more betting on the come."

That's the quintessential summary of cattle-industry economics now compared to last year. The market is running away from margin operators because supplies are increasing significantly relative to demand.

"The biggest difference today than at this time last year is we have about 10% more cattle on feed heading into the summer, which is record large for this time of year," explains Mike Miller, Cattle-Fax director of research and education.

Not only is a wall of increased supply set to hit the market during what are historically the softest market months of the year, it's coming at a time when high breakevens already have feeders losing around $100/head (more on yearlings, less on calf-feds, Miller says).

However, Peel believes the record April 1 cattle-on-feed numbers make reality appear darker than it actually is. Though numbers are up, he says it's not because the cattle inventory is 9%-10% larger than predicted but because more calves were forced into the feedlot earlier than anticipated by drought and a lack of stocker pasture.

"We started the year with a cattle inventory 1.7% larger than in 2005. We'll add maybe another 1-1.5% to those numbers with feeder calves from Canada. So, we have the capability for feeder cattle supplies to be 4-4.5% larger this year, but not 9%," Peel says.

Either way, Miller adds, "We're still in really good shape from a demand perspective, but probably not good enough to offset the supplies we see coming toward us."

In fact, retail beef demand is down 4.5% through the first quarter, according to preliminary Beef Demand Index figures. Consumption is actually up slightly, but a sharp decline in inflation-adjusted prices means demand is down, but still well ahead of 1998 when it finally turned the corner.

Analysts like Nevil Speer at Western Kentucky University wouldn't be surprised to see beef demand suffer more under the collective weight of record and near-record supplies of poultry and pork. That's on top of high fuel prices that increase the price of all consumer products, while making consumer wallets lighter to start with.

For anyone who thinks the outlook would be at least twice as bright if politics and ineptitude hadn't conspired to keep international beef trade in limbo, both Peel and Miller say having the international markets fully engaged would undoubtedly provide a psychological lift. However, it probably wouldn't have changed the industry's current position from a fundamental standpoint.