Strength of the U.S. Dollar and Beef Exports Back »

In recent months the U.S. dollar has been gaining strength. The strengthening of the dollar means it is cheaper to import goods. For example, if last year a pencil from Japan cost 1,000 yen this equated to $1 U.S. This year even though the pencil still costs 1,000 yen in Japan it might only cost $0.75 in the U.S.1 The change in the strength of the dollar while good for people importing goods may mean beef producers who export need to watch the market.

The U.S. agricultural trade surplus for 2014 was $43.3 billion. For 2015 it is forecast to be $22.5 billion. This is the smallest agricultural surplus since 2007. U.S. exports of beef to Japan are expected to be down $400 million partly due to beef of which Japan is one of the largest markets. Exports to China are expected to be down $400 million as well. This is mainly due to weaker U.S. exports of hides and skins (USDA). U.S. beef exports to Canada have fallen by 20.9% in January and February of the 2015 fiscal year (Peel, 2015).

One reason behind the decrease in exports, aside from the increased strength of the dollar, may be due to record high U.S. cattle prices, which favor imports. For example, Canadian exports of feeder cattle to the U.S. in 2014 increased 37.8% from the previous year (Peel, 2015). In 2014 the U.S. exported 14% of all beef produced (USMEF). This means it is important for producers to watch the strength of the dollar in the coming year because this may negatively impact the exports of U.S. beef.

References:

  • Peel, Darrell. April 2015. Cow/Calf Corner-North American Cattle Situation: Canada.
  • USDA. February 2015. Outlook for U.S. Agricultural Trade. AES-85.
  • USMEF. Red meat exports. Accessed on April 6, 2015.

Disclaimer: The information in this article is believed to be reliable and correct. However, no guarantee or warranty is provided for its accuracy or completeness. This information is provided exclusively for educational purposes and any action or inaction or decisions made as the result of reading this material is solely the responsibility of readers. The author(s) and South Dakota State University disclaim any responsibility for loss associated with the use of this information.

  1. This example assumes no additional import taxes or fees
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