"We look at the industry right now, and it's an opportunity of a lifetime. And when I say that, it's with full and complete respect for the role that Mother Nature plays in our industry," NCBA CEO Forrest Roberts told DTN. The convention kicks off Wednesday and is expected to draw a record crowd of more than 7,000 cow/calf producers, ranchers, feedlot owners and packers.

"That's something amazing given all the things that are happening in our economy but also the excitement in our industry as well," he said.

The beef herd is the smallest it's been since the 1950s at just under 30 million head. Texas' drought drove many ranchers to place calves on feed early and to send their mother cows to slaughter, keeping cattle prices at record-high levels as the supply shortened. Add strong demand, particularly with exports regaining their pre-2003 strength, and the time is right for ranchers to start rebuilding the herd.

"Expansion is the big question that remains unanswered," said DTN's chief livestock analyst John Harrington. "A little bit of promising news is that beef replacement heifers were 1% above a year ago, and they were thought to be down 1%. The economics are right as far as ranch profits, but is it being done? As far as hard numbers are concerned, we're still in liquidation. But have we turned the corner and is USDA just behind the curve?"

Roberts said the current demand environment could justify an expansion of the herd to at least 33 million and at most 36 million. At this year's conference, many market participants will be weighing in on how much they can expand.

The cattle inventory report showed that Texas' cattle and calf herd declined by 11% last year while Nebraska's grew 4%, which Harrington said is an indication of how much of Texas' herd was temporarily relocated. Roberts, who is originally from southern Texas, said it's true that "a lot of those cattle did go to the Sandhills of Nebraska and will probably be there another year."

He also noted that while the market is favorable for ranchers and cow/calf producers, feedyards and packers are facing razor-thin margins. Maintaining strong demand will eventually help pull them through, Roberts said. He thinks NCBA members will be discussing different approaches that protect the current demand levels while stimulating growth and profitability across all segments of the supply chain.

"With demand, the big question is if it can be sustained," said Harrington. "We've got all-time record-high prices at the beef counter, over $5 on retail choice. How much higher can it go before you get consumer resistance?

The three-day convention's focus on education, engagement and entertainment means it comes with a packed agenda. On Wednesday, Cattlemen's College programming will focus on helping producers find ways to become more efficient and better manage market volatility and risk.

Then the conference turns to engagement with a plethora of NCBA committee meetings, NCBA Federation meetings, Cattlemen's Beef Promotion and Research Board meeting and many guest speakers. Among topics on the agenda for certain committees:

-- A discussion on MF Global that inclues Chief Operating Officer of CME Group, Bryan Durkin.

-- An update on the Eastern Livestock work group and a beta test of a debit card reader in a sale barn.

-- An overview of challenges to animal welfare standards on a federal level, related to United Egg Producers agreement with the Humane Society of the United States to create standard cage sizes.

-- Updates on federal livestock indemnity programs, conservation programs and Missouri River management.

And on the entertainment score, NCBA will be hosting a "Honkey Tonk Party" on Thursday and has rented out the Grand Ole Opry for a special program on Friday night.

To follow the convention's happenings, follow @KatieMDTN on Twitter and watch the #CIC12 hashtag.

Katie Micik can be reached at katie.micik@telventdtn.com

(CC/AG)

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