Livestock Market Information Center — For the month of February (latest official data available), U.S. beef, pork, and broiler exports were below expectations. Compared to a year ago, in February beef export tonnage dropped 2.5%, pork by 12.7%, and broilers by 7.5%. Year-on-year, tonnage of beef and pork sold to Japan dropped of 3.1% and 9.8%, respectively. Those declines were in large part caused by the rather abrupt change in direction of the yen to dollar exchange rate last fall and subsequent devaluation of the yen.


In recent years, the value of the dollar compared to other currencies generally assisted exports of U.S. meat and poultry items, but that situation has changed regarding Japan.  The dollar's relative value, the exchange rate, is driven by three major factors: 1) differentials in economic growth rates between countries; 2) monetary policy, importantly interest rate differentials, between countries and related capital flows; and 3) the unique position of the U.S. dollar as the world's reserve currency and its inherent value as a safe haven in periods of economic and or political turmoil.  Changes in exchange rates directly adjust the cost of imported goods. A lower exchange rate makes prices of goods from overseas higher, which tends to reduce purchases.


Recently, the most important and dramatic exchange rate change has been in the value of the yen. Monetary policy changes in Japan have caused devaluation of the yen. Since mid-October of 2012, the value of the yen has dropped by 25.2% versus the U.S. dollar; in just the last three weeks it dropped by 3.7%.


LMIC has lowered forecast 2013 exports significantly for pork and made more modest reductions for beef and chicken. Lower exports forces more production to be purchased by U.S. consumers than previously expected. Secondary to those export forecast changes, LMIC raised expected U.S. chicken production based on recent profitability estimates and data from USDA on eggs set. Prior to those recent adjustments, U.S. total per capita red meat and poultry consumption (or disappearance) was expected to record a modest year-on-year decline in 2013. Now, the forecast is for an increase – on a retail weight basis, per person red meat and poultry this calendar year is forecast to be 202.6 pounds, up about 0.3 from 2012's. That is a small increase, but it will be the first to occur since 2004.