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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How quickly will full beef-export trade be restored to Japan and South Korea?

Though it sounds like a broken record, optimism is growing that U.S. beef-export demand will be restored with Japan and South Korea sooner than later; Cattle-Fax is predicting some resolution in the first half of this year. With U.S. beef exports last year at about 70% of the 2003 level - before BSE closed markets - Cattle-Fax says a fully restored Japanese market would add an additional $65/head of fed cattle; fully restored trade with South Korea would add another $25-$30.

In fact, depending on how you rationalize the future, the global buying power and demand for grain that's turned those markets inside out, represents the U.S. beef industry's most significant growth opportunity going forward.

What will be the degree and speed of increased feedlot and packing consolidation?

Last month, Tyson Foods shuttered its harvest facility at Emporia, KS.

“At a time in the cattle cycle when cattle numbers should be at or near their highest, the level of production isn't approaching its historic peaks and we don't see any increases in fed-cattle production in the foreseeable future,” said Jim Lochner, Tyson Fresh Meats senior group vice president, last month when the company announced it would cease cattle harvest at its Emporia facility.

At the time, Dick Bond, Tyson Foods CEO, explained, “There continues to be far more beef-slaughter capacity than available cattle, and we believe this problem will continue to afflict the industry for the foreseeable future. We estimate the current slaughter overcapacity in the industry to be between 10,000 and 14,000 head of cattle/day.”

It's no surprise that packing and feedlot sectors - already with at least 20% excess capacity, according to most industry estimates - are looking to pare capacity to a point more in line with shrinking cattle numbers.

As of Jan. 1, the inventory of all cattle and calves stood at 96.7 million - down slightly from last year's 97 million. All cows and calves are down 1% from 42 million to 41.8 million. Beef-cow numbers declined 1% at 32.6 million, while the dairy-cow herd increased 1% to 9.22 million head.

The safe money sees further liquidation this year. Beef-replacement heifers were down 4% last year (5.67 million head). That doesn't mean beef production will decline significantly.

According to Kevin Good, Cattle-Fax analyst, the U.S. will import about 2.5 million head this year. Even so, U.S. per-capita consumption will decline slightly because of supply, not demand.

Speaking of which, Good says, from an inventory standpoint, the traditional cattle cycle is on life support, evolving into one based on beef production and technology, rather than cattle inventory - producing as much or more beef in relative terms with the same number or fewer cattle.

How will the farm bill play out?

By mid-February, a Senate-House Conference Committee was still in the throes of hashing out a farm bill that President Bush said he'd veto without significant revisions.

Though the House presented a new version more to USDA's liking, Schafer explained, “The Senate's most recent farm-bill proposal recommends increases in taxes and significantly grows the size and scope of government while failing to implement much needed reform in our current farm bill programs… The President has said time and time again that he won't support a bill that raises taxes and uses taxpayer dollars to increase the size of government, and that is exactly what this proposal does.”

Keep in mind, besides cost and reform, this farm bill continues to include language that would ban packer ownership of cattle more than 14 days ahead of harvest, as well as revisions to compliance mandates for country-of-origin labeling scheduled to begin in September.

Which opportunities will individual operations embrace?

It's not like anyone expects the bottom to drop out of the cattle market this year - supplies are too snug relative to demand, thanks to over-capacity in the feeding and packing sectors. Popular consensus among market analysts is that prices for calves and feeder cattle will be slightly lower next year, but that input costs will continue to rise.

However, there's also more opportunity to differentiate products and add value than ever before.

Whether its natural and organic, preconditioning, age-verification or brand-specific attributes - even grid and formula pricing for that matter - there are opportunities to receive prices higher than market averages. That's why the price spread for same-weight, same-sex, same-class cattle are historically wide and expected to grow.

“You'll have to embrace more risk management in your operations,” says Randy Blach, Cattle-Fax CEO. “This is a different business today, and it's going to continue to change.”