According to the latest USDA supply and demand estimates, the United States is expected to export 12.760 billion pounds of beef, pork and poultry products in 2009, or 14.1 per cent of the amount of red meat and poultry that will be produced in the US this year. On the other hand, combined red meat and poultry imports for the year are expected to be 3.732 billion pounds. Exports account for a significant part of the overall demand for US products and shifts in currencies tend to change the relative price that consumers in different parts of the world see, thus providing an incentive or disincentive for consumption, something may not be quite as obvious if one were to study only US dollar denominated prices.

USDA expects combined US meat exports to increase by 3 per cent in 2010, an estimate that likely reflects a simple trend increase and will likely be revised quite a few times depending on the path of economic growth and exchange rates. The chart below shows the change in the value of the US currency since 1 July 2009.

By March 2009, the US dollar had gained about 20 per cent against a trade weighted basket of currencies and it was up even more against specific currencies, such as the Euro or the Australian dollar, or the Russian Ruble. This is important because even as the wholesale price of some beef, pork or poultry export items were somewhat lower compared to last summer, the decline in price was more than offset by the rise in the value of the US currency. For instance, the price of chicken leg quarters last summer was around 53 $/cwt or 1245 Russian rubles (at 23.5 exchange rate). By March 2009, the price of US chicken leg quarters was 34 $/cwt, or 36 per cent lower than last August. When converted to Russian rubles using the March exchange rate of around 35 to 1 $US, the actual price that Russian buyers likely saw was 1190R/cwt, only 4.4 oer cent lower than last summer.

Right now, the price of US chicken leg quarters is around 45 $/cwt or 1395 R/cwt, +12 per cent higher than last summer, not exactly a bargain. One can do this exercise with a number of export items but the idea is the same. Keep an eye on the exchange rate as a sharp depreciation will tend to lower overall prices for world buyers and make them more competitive with the US consumer. At a time when domestic meat supplies are expected to be very tight in 2010, a shift in exchange rate could provide a significant demand boost... or maybe not.