Rising dollar part of September decline in U.S. beef exports

Beef exports are up 4.6% through September, but global economic weakness and a rising U.S. dollar pushed exports lower 5.7% in September compared to a year ago, according to U.S. Beef Export Council data.

The September decline was the largest decrease in beef exports over the past two and half years, according to Derrell Peel, Oklahoma State University extension livestock marketing specialist. Peel said the sharp decline in September exports may indicate the global economic weakness is taking hold.

“The combination of macroeconomic weakness around the world and U.S. efforts to combat inflation with higher interest rates has resulted in the U.S. dollar strengthening against many currencies. A stronger dollar makes U.S. product exports more expensive and simultaneously makes imports of foreign products more attractive,” Peel said.

He said currency exchange rates for the largest beef export markets continue to fall against the U.S. dollar. For example, the Japanese Yen fell 30% in September and October compared to a year ago. Peel said $1 (U.S.) will exchange for 147 Yen in October, compared to 113 Yen a year ago. Peel said monthly beef exports to Japan are down 7.5% year over year in September. South Korea’s currency exchange rate fell 20% in September and exports to South Korea were down 10% that month. Currency exchange rates for China and Hong Kong are down 5% in September and October and exports fell 3.6%.

Beef exports to Canada were down 0.3% in September compared to a year ago. South Korea purchased 10.7% less U.S. beef and Taiwan’s U.S. beef purchases were down 26.2% in September compared to a year ago. Mexico increased U.S. beef exports by 5.2% in September, Peel reported.

“U.S. beef exports will continue to face headwinds in 2023 and beef exports will likely decrease from record levels,” Peel said.

The value of beef exports was $9.9 billion in 2021, up from $7.1 billion in 2020, and was 12.3% of all U.S. beef production in 2021, according to the U.S. Department of Agriculture.

The U.S. also imported 9.2% less beef in September compared to a year ago. Peel said total beef imports are 6.4% higher year over year for the January-September period because of strong imports early in the year.

He said beef imports from Brazil spiked early in 2022 as a Chinese embargo on Brazilian beef in late 2021 made large supplies of Brazilian beef available. In January, Brazil was the largest source of U.S. beef imports and accounted for 28.4% of total imports for the month. After four months of year over year decreases, Brazil accounted for 9% of beef imports in September and was the number six source of beef imports for the month. Peel said year to date beef imports are up from Canada, Mexico and Brazil and are down from Australia and New Zealand.

“Beef imports are expected to continue decreasing toward the end of the year but are likely to increase in 2023 as U.S. beef production falls from record levels. Domestic production of lean processing beef may decline sharply in the coming months, making beef imports more attractive, especially when buoyed by a strong U.S. dollar,” Peel said.