USA: How will exchange rates affect the livestock sector?

The value of the US DOLLAR has fallen substantially over the past year, and CoBank Knowledge Exchange analysts say they expect moderate deflation in 2021. This may or may not be good news, depending on the product.

“A weaker dollar usually makes US agricultural products more competitive in the global EXPORT market. However, not all commodities are equally affected given the diversity of global export competition and exchange rates,” according to a recent report from CoBank's Knowledge Exchange.

Tariffs and weather conditions in key agricultural producing regions often drive market dynamics and should not be discounted, the report says.

"Agricultural exports are expected to continue at a stronger pace in 2021 thanks to a weaker US dollar," said Tanner Emke, CoBank Knowledge Exchange Manager. face a currency headwind."

What does this mean for livestock farmers?

U.S. animal protein exports this year are expected to benefit from moderate tailwinds caused by a weaker U.S. dollar in 2021.

The weighted animal protein trade index is expected to fall by 2% this year, CoBank said. The Animal Protein Sales Index has gained almost 9% in 2020, with the index peaking in April and May, when the currencies of Brazil, Australia and Argentina fell significantly against the dollar.

After a difficult currency situation in 2020, the prospect of a stronger Australian dollar and euro should make U.S. beef and pork exports this year the biggest beneficiaries of the situation, analysts say.

Currency aside, other factors pointing to the prospects of US MEAT exports include less disruption to US meat processing capacity, a recovery in global food service demand, and an upward trend in CHINA 's meat and poultry imports .