05/17/05 NCBA economist on herd expansion

American Rancher May 17, 2005 Two significant variables make it hard to forecast just what the cattle market will do this year. Those being the uncertainty surrounding the reopening of the U.S. border to live Canadian cattle and the reopening of Japan to U.S. beef exports. Gregg Doud, economist for the National Cattlemen's Beef Association, says there is another important variable. Doud: "The other variable that you have to throw in there is the fact that our heifer placements in feed lots are down about five percent. That means that we are expanding the size of our herd or at least that is what it obviously suggests. And if you look at the value of cow-calf pairs, heifer pairs or even older cow-calf pairs, there is a huge demand for that. And I think a huge chunk of that is coming from the fact that at least in the center part of the U.S. we have some the best moisture conditions we've had in five, six, seven years. Especially in Texas. That is really driving this. They have wanted to do this. They have had economic signals to expand for several years but we haven't been able to do because we haven't had the grass. Well now where we do have the grass, they are starting to ramp up." Doud says dry conditions in the Pacific Northwest and Montana could limit herd expansion plans those areas. In its most recent outlook report the USDA forecasts average fed steer prices this year of between 85 and 89-dollars a hundredweight. I'm Bob Hoff.