Rats. It looks like the U.S. beef industry may have missed the best of the weak dollar's half-off sale on U.S. exports.
There is plenty to dislike* about the current economic downturn, but cattle exports seem to have been especially hard hit. That just makes sense, since everything we hoped for has been hurt.
For one thing, panicky investors have rushed to buy up dollars, causing the buck's value to shoot 30% over it's low earlier this year. So, even though fed cattle have lost like 10% of their value, they cost more if you're buying beef with yen.
* Among things to dislike about the current economy
- How it is affecting the election.
- How it is affecting cattle prices and beef demand.
- How it will most likely affect land values as the rich dudes who've been buying this stuff finally realize it was all a bubble. Many of them were the victims of unscrupulous lenders, you know.
- How has hurt those poor ethanol investors—also victims of unscrupulous lenders—who were Texas hedged on corn and now need even more gummit money to buy cheaper corn so they can sell cheaper ethanol.
- What it has done to recently emeritused editors' 401k figures.
Like, if you could buy a steer for 100 clams, to choose a generic component of the dollar index calculation, a few weeks ago, when cattle were trading at $1, now that cattle are at .92, the dollar-to-clam relation means you now need 119 clams. So you have to pay more for something of less value.
Who wants to do that? It's not like clams grow on trees, you know.
And especially not now. The other great part of the former great outlook for beef was all the boats rising on the tide of globalization. Things have been looking pretty good for a lot of people around the world who never saw things look good before. Folks like that, the rice and bean eaters who make up the huge majority of humans, had been spending some their new wealth moving up the protein ladder. They've been buying pork and beef and living comparatively large.
But as the economy wobbles, so does their confidence. If you're afraid that you may not be able to afford even rice and beans in a few months, you're less inclined to splurge on beef this month.
It will come back, of course. Globalization isn't dead. The worldwide economy will recover. And when it does, no sector of the U.S. economy stands to gain more than beef.
Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at firstname.lastname@example.org.