Strong dollar slows some meat, dairy exports
Dec. 1, 2015
While much has been said about the negative impact of the strong dollar on U.S. grain exports, the value of the currency has been just as detrimental to U.S. meat, poultry and dairy exports, with the exception of pork, and conversely, has resulted in higher imports.
“The third-quarter trade data for red meat, poultry and dairy products shows lower year-over-year exports and higher year-over-year imports,” the U.S. Department of Agriculture said in its latest Livestock, Dairy and Poultry Outlook. “The third-quarter net value of red meat, poultry and dairy exports was sharply lower compared with year-ago values. The most likely overall factor driving these results is the continuing high exchange rate value of the U.S. dollar.”
U.S.D.A. data showed export volumes in the third quarter were down 20% for beef, down 25% for dairy products, down 22% for poultry and down 26% for eggs compared with the same period last year. The U.S.D.A. acknowledged that high U.S. beef prices have discouraged exports and encouraged imports, and that trade restrictions (and reduced supplies) resulting from the massive outbreak of highly pathogenic avian influenza earlier in the year “also played a significant role in lower exports” of eggs and poultry.
Pork exports surge as U.S. production increases.
The total value of red meat, poultry and dairy net exports in the third quarter was $1.6 billion, down 50% from the same quarter last year, the U.S.D.A. said.
Year-to-date beef exports through September were down 13% from the same period last year. Exports were forecast at 2,223 million lbs in 2015.
“The general take away from the January to September period of 2015 is that U.S. beef exports have suffered a significant setback this year, and annual 2015 exports are expected to fall below 2014 levels by 14%,” the U.S.D.A. said.
Conversely, total U.S. beef imports in 2015 were forecast at 3,432 million lbs, up 16% from 2014 and 54% above forecast exports. Exports in 2014 fell below imports for the first time in five years and were expected to remain so at least through 2016. The U.S.D.A. noted record exports of less-expensive beef from Australia have captured a greater share of the global market and accounted for 46% of U.S. beef imports in September, although the pace was expected to slow in the fourth quarter as Australia meets its tariff-free quota.
Pork exports, up about 18% from a year ago in September and up 7.5% in the third quarter, have been the main exception to the lower export trend despite the strong dollar; pork and live hog imports also were up from 2014. The U.S.D.A. noted, though, that third-quarter exports were compared with a weak quarter in 2014 when shipments were slowed by the presence of Porcine Epidemic Diarrhea in the U.S. hog herd.
Value of quarterly net exports of red meat and poultry and nominal broad dollar index 2013 - third quarter 2015
The boost in pork exports largely is the result of an expected 7.3% surge in U.S. pork production in 2015, “reflecting a strong recovery from last year when disease problems hampered production.”
Also of note is that the U.S.D.A. forecast 2015 U.S. commercial production of pork, at 24,508 million lbs, to surpass beef production, at 23,715 million lbs, for the first time since 1952, when pork output was 10,321 million lbs and beef output was 9,337 million lbs. Historically, pork production exceeded beef production from 1899 (as far back as records go) into the 1940s. Production flip-flopped for about a decade before beef took the lead in 1953 and held it until this year. The total U.S. cattle inventory on Jan. 1, 2014, was the smallest since 1951, and the all cows and heifers that have calved inventory was the smallest since 1941, although the categories increased 1% and 2%, respectively, on Jan. 1, 2015.
The U.S.D.A. expects 2016 U.S. exports of beef, pork, broilers and turkeys all to increase from 2015 levels mainly due to increased production of all four products as the value of the dollar is expected to remain strong if not strengthen