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September 7, 2017
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USDA Economic Projections Good News For Meat Exports

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USDA Economic Projections Good News For Meat Exports
MeatingPlace.com

The U.S. dollar is expected to remain weak against other major currencies through the rest of 2017, according to USDA’s latest Outlook for Agricultural Trade report, which is good news for a meat industry increasingly dependent on exports.
The value of the U.S. dollar has declined substantially since the beginning of the year, losing roughly 7 percent of its agricultural export-weighted value since January.

The relatively weaker dollar primarily reflects improvements in the economic outlook of key U.S. trading partners, particularly Europe and Japan. The dollar is expected to generally trend weaker for the rest of 2017 but to remain strong relative to the period preceding the dramatic strengthening that began at the end of 2014.

GDP growth

At the same time, world per capita GDP growth is expected to reach 1.8 percent in 2017 and 1.9 percent in 2018. This represents a broad-based pickup in growth across developed and developing countries relative to growth of 1.4 percent in 2016.

In the key emerging markets of Brazil, Russia, India, Indonesia, and China, per capita GDP growth is expected to accelerate to 4.4 percent on average in 2017 and 4.6 percent in 2018.

Global trade volume growth is expected to be strong at 5.6 percent in 2017 then retreat to 3.6 percent in 2018, USDA predicted, noting that even as growth slows in 2018, the growth rate is still strong relative to the 1.6-percent growth in 2015 and 2016.
Per capita income improves

When people make more money, they eat more meat

USDA reported per capita income growth is expected to be strong across North America in 2017 and 2018. U.S. per capita GDP growth is expected to be 1.1 percent in 2017 and 1.6 in 2018, as the employment picture continues to improve, business investment and consumer spending remain solid.

  • In Canada, stronger household consumption, business investment, and exports are expected to contribute to per capita GDP growth of 2.1 percent in 2017, although slower consumption and weakening mining and energy investment are expected to help push growth down to 1.6 percent in 2018.
  • Mexican income growth is expected to be 1.2 percent in 2017 as government investment, particularly construction, slows. Mexican income growth in 2018 will increase to 1.5 percent with momentum from stronger-than-expected fiscal expansion.
  • Per capita income growth in Asia and Oceania is expected to be steady at 3.7 percent in 2017 and 2018.
  • Income growth in China is expected to be 6.1 percent in 2017, outpacing predictions made earlier in the year. Continued dollar strengthening relative to the renminbi is anticipated, with economic growth rates decelerating as China continues the process of increasing consumption and imports while slowing investment and exports.
  • India’s per capita income growth is expected to nearly match China’s at 6.1 percent in 2017. Steady growth is expected in the rest of South and Southeast Asia despite slowing demand from China.
  • Although Latin America is expected to emerge from recession, economic growth will be very slow in 2017, with flat per capita income, but rebounding slightly in 2018.
  • The dollar is expected to weaken against the Brazilian real and Argentine peso in 2017 as these currencies benefit from strengthening external demand. In the case of Brazil, while positive GDP growth is expected, it is not projected to be strong enough to produce positive per capita income growth until 2018.
  • Venezuela is expected to remain in recession in 2017.
Meat exports

USDA raised its fiscal 2017 outlook for U.S. livestock, poultry, and dairy exports by $200 million from May indications to $28.9 billion on minor adjustments across most products.

The beef export forecast is up $100 million to $6.1 billion as higher prices more than offset a decline in volumes.

Poultry and poultry products are forecast $200 million higher to $4.9 billion on higher prices that more than offset relatively weak volumes due to lingering HPAI-related issues.

Pork, however, is forecast $100 million lower to $5.3 billion as a slight increase in price is unable to offset a decline in export volume.

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