One side-effect of the global economic downturn – a stronger U.S. dollar relative to many foreign currencies – has stifled exports of beef and other commodities.

But analysts at the LivestockMarketinginformationCenter say the situation is changing as the economic picture improves and currencies such as the Mexican peso gain value relative to the dollar. As the slowdown in the global economy eases, the purchasing power of foreign buyers should recover and be supportive to U.S. meat and poultry exports according to LMIC. The lower value of the dollar will, however, result in higher prices for commodities we import, such as oil.

LMIC notes that the exchange rate of the U.S. dollar relative to other currencies, particularly those in Australia, Canada and Mexico, posted a significant increase during the first quarter of this year but since then has declined to levels not seen since this time last year.  The exchange rate between the U.S. dollar and the Mexican peso has adjusted the most. On average, according to LMIC, the rate is one dollar for 10-to-11 Pesos. Last fall, the exchange rate jumped to where a dollar would buy 13 to 14 pesos. The latest weekly data, for the week ending October 23, showed the U.S. Dollar down about 3 percent to the peso compared to the prior year and about one percent lower than the prior week. A return to a more normal exchange rate should improve prospects for exports to Mexico, according to LMIC.  

Looking at Canada, LMIC notes that the U.S. dollar strengthened some against the Canadian dollar earlier this year, but since has declined. The recent decline in the U.S. dollar has been one factor limiting imports of feeder and slaughter animals from Canada. Currently the U.S. dollar is about 16 percent lower than the same week in 2008.  Exchange rates also were influenced the increase in beef imports from Australia earlier this year and the decline in U.S. beef exports to South Korea. But the current shift should favor exports to, rather than imports from, our tradng partners in the Pacific Rim.