The National Cattlemen’s Beef Association (NCBA) Chief Economist Gregg Doud yesterday released the following statement on the economy and its consequences for the beef industry:
“Lately, economists and market analysts have been discussing how hourly swings in exchange rates, interest rates, and commodity markets are affecting the cattle business. These historic economic times are particularly problematic for U.S. ranchers, who typically market the majority of the calf crop once a year in autumn.
“While all agricultural commodity futures price charts have essentially followed the downward trends of crude oil and the stock market, the cattle market has been particularly hard-hit. The slowing U.S. economy has taken its toll on wholesale beef prices, which is particularly important since 50% of U.S. beef consumption occurs away from home.
“Other key negative fundamentals include an incredible appreciation in the U.S. dollar that has hurt our exports, a collapse in the Russian economy that has hurt U.S. poultry exports and a sudden decline in U.S. pork exports to China. It has been the combination of these factors that has led to a sudden and steep drop in U.S. beef, pork and poultry prices in recent weeks as these supplies back up into the domestic marketplace.
“Since the U.S. exported an all-time monthly record of $150 million in beef and beef variety meats to Mexico in August, the U.S. dollar has strengthened from 10 pesos to the dollar to 13 pesos. This resulted in a dramatic decrease in the buying power of Mexican consumers for items imported from the United States.
“In Korea during this same timeframe, the currency ‘swing’ in buying power has been about 35% to the detriment of U.S. beef.
“This clearly sets the stage for a very difficult fourth quarter and probably beyond for cattlemen. Like it or not, we live in a global economy and right now it is imperative that our leaders here and around the world do everything they can to get the belt back on the machine and get it running again. It also means that our ability to export not only beef but also pork and poultry are critical to maximizing the value of the product ranchers bring to market.”