This past year has certainly seen some ups and downs in the cattle market. One confirmed case of a BSE positive cow in Washington State last December, following an earlier discovery of a BSE cow in Canada in May of 2003 has changed the North American beef industry. Trade flows have been dramatically altered and producers have become frustrated with how political this issue has become. Other issues in the beef industry: animal identification, packer ownership of cattle, country of origin labeling and environmental regulations have generated considerable debate. Some of these issues have a more direct impact on markets than others. However, if one considers the underlying supply and demand fundamental in the cattle industry, much of the current and past price movements can be explained. Furthermore, these fundamentals give us some indication of the likely direction for cattle price in the future.