Breed→ Cause to produce an offspring (an animal) when it is a noun it means 'a distinctive stock of animals'
Stood→ Be in or rise to an upright position. (it is a past participle form of 'Stand')
Steed→ A horse.
According to grammar, we need a noun here because before the blank there is an adjective 'excellent' hence in the options there is only one noun which is 'Breed' so it is the correct answer.