Ask a dozen folks how to plan for the next 12 months and you'll get plenty of discussion based on myriad qualifications and assumptions, but few confident predictions. There are too many significant and dynamic variables up in the air for it to be otherwise. For instance:

How many acres will be planted to corn, and what will be the ultimate yield of those acres?

At last month's Cattle-Fax Outlook Seminar, analyst Mike Murphy explained the lower input cost of wheat and soybeans and their healthy prices mean that fewer acres of corn will be planted this year - the predicted decline is around 4 million acres. In turn, he says that places more pressure on corn yields per acre.

Murphy points out the currently weak value of the dollar when compared to other primary global currencies is helping make U.S. grain exports more popular. But global demand has been growing quickly for the past several years, based on increased buying power.

He explains global grain consumption exceeded global grain production four of the last five years; U.S. wheat stocks are at historic lows. U.S. corn stocks that normally run 20-30% are now in the teens.

“We've seen more demand in the past five years than at any time in the previous 40 years,” Murphy says.

Cattle-Fax expects corn to run $3-$5 this year, barring a hiccup in production, and with plenty of volatility.

Will the government attempt to mediate rising feed and food costs by opening up Conservation Reserve Program (CRP) acres without penalty? Will it remove or lessen tariffs on ethanol produced outside the U.S., or adjust the blender's ethanol tax credit in this country, which continues to prop up an artificial price floor?

According to USDA Secretary Ed Schafer last month, USDA has no plans currently to release CRP acres. In fact, at the annual meeting of the National Cattlemen's Beef Association (NCBA), Schafer said, “For today and tomorrow, the growing demand for ethanol is likely going to mean corn prices will stay higher than what you want them to be. As we move to non-feed sources to generate our energy, it will stop distorting the prices of your feed.”

He failed to mention how the dollar's weak value, burgeoning global grain demand - the growing inelasticity in the grain markets - and the price controls being imposed on selected grains by some countries will remove distortion from the markets any time soon.

As for tariffs and tax credits, the love affair between Capitol Hill and green energy seems to have no bounds, at least during this election year.

How severe and long-lasting will the nation's economic downturn be, and how will it ultimately impact consumer beef demand in this country and around the world?

In terms of the economic downturn - fueled by the mortgage mess and credit crisis - the Federal Open Market Committee (FOMC) has reduced the target rate for federal funds (what interest rates are based upon) by 1.75% since the last half of September. Last month, Ben Bernanke, Federal Reserve Chairman, told members of the Senate Committee on Banking, Housing and Urban Affairs, “…The outlook for the economy has worsened in recent months, and the downside risks to growth have increased… The softer labor market, together with factors including higher energy prices, lower equity prices, and declining home values, seem likely to weigh on consumer spending in the near term… over the four quarters of 2007, the price index for personal consumption expenditures (PCE) increased 3.4%, up from 1.9% during 2006.”

Of those expenditures, the all-food Consumer Price Index (CPI) increased 4% between 2006 and 2007, the highest annual increase since 1990. The Economic Research Service predicts the CPI for all food will increase 3-4%, as retailers continue to pass on higher commodity and energy costs to consumers in the form of higher retail prices.

Though beef demand remained surprisingly strong last year in light of the negative national economy, it's lost ground since 2003, according to the annual Choice Retail Beef Demand Index.

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