International trade paints very different picture in 2015

International markets and trade trends have a big impact on our domestic market.

Nevil Speer

October 12, 2015

2 Min Read
International trade paints very different picture in 2015

A strong dollar has been an enduring story for U.S. business during the past year. The strengthening trend makes doing business with U.S.-based companies relatively more expensive. As such, the strong dollar has weighed heavily on multi-national companies that depend on international business as part of their revenue stream. That’s served as a major headwind for corporate earnings and is contributing to both volatility and bearish sentiment within the U.S. equity markets thus far in 2015.

The same holds true for exporters of beef goods. A stronger dollar makes U.S. beef exports less competitive compared with beef from other countries, such as Canada or Australia. Conversely, the strong dollar makes imports relatively less expensive over time. The market is responding to that reality. 

This week’s illustration demonstrates both sides of the equation. First, exports have declined nearly 202 million pounds year-to-date, versus 2014. From a value perspective, the decline represents lost revenue of nearly $245 million compared with exports through August last year. Meanwhile, year-over-year comparison has imports up nearly 597 million pounds. Increased import tonnage represents $1.57 billion.   

imports versus exports

From a different perspective, the beef industry’s trade balance from a value perspective has been negative every month thus far in 2015. That’s a very different dynamic from what the beef industry is used to in recent years. In fact, even in 2014 as the dollar began to gain strength, the trade balance remained positive every month throughout the year and finished with a positive net trade balance of $1.1 billion. That accomplishment in 2014 represented the sixth year in a row in which U.S. export value exceeded import value. That streak will not continue in 2015. 

Going forward, there are several key components at play. First, the relative strength of the dollar is hugely important. Events surrounding foreign exchange, interest rates and monetary policy impact every aspect of our economy – including cattle markets. Second, declining slaughter cow values make domestic lean trimmings more competitive with imported trimmings.  

How do you perceive the various influences on international trade? Conversely, what’s your perception of international trade on the current state of the cattle market? Where do you see this headed in terms of monetary policy and its influence on global growth?   

Leave your thoughts in the comments section below. 

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About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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