CME: Demand, Exports Vital to Continue Success

US - This summer's magical run for pork and this year's magical run for beef have been driven by a recovery in domestic demand and a hugely successful year for exports. With reports of a downgrade in the US Treasury debt, Steve Meyer and Len Steiner look at two critical issues that affect the success of the beef and pork markets.

9 August 2011

3 minute read

North America

How will meat and poultry demand hold up?

Demand indexes for May (the last month for which we have complete data) indicated that pork demand remained strong (+6.7 per cent from May 2010) but that beef and broiler demand had waned (-3.1 per cent and -1.1 per cent from one year ago, respectively).

Those slumps corresponded to a very soft month for restaurants according to the National Restaurant Association’s Restaurant Performance Index (RPI) but the June composite RPI as well as the Current Operations Index were both back above 100, implying restaurant sector growth.

Can that trend as well as what appears to be strong demand at retail survive the negativity of the broader market and the press’s reports on it?

Can we keep up the pace of exports?

The key here, of course, will be the value of the dollar but can a downgrade of bonds do anything but push the dollar lower?

Probably not in and of itself but we must remember that things could again get worse in other places, pushing the dollar higher just as happened in 2008. This is especially true given the Euro situation so focus on the exchange rates that count for US agriculture – those involving our customers.

All of those have strengthened since early ‘09, making US products cheaper. They may just continue that trend in this new environment.