Weak dollar to support US animal protein exports
The value of the U.S. dollar weakened substantially since March 2020 and is expected to experience modest deflation in 2021. A weaker dollar generally makes U.S. agricultural products more competitive on the global export market. Even if not all commodities will see a growth in exports, animal protein is expected to perform well for the next 10 months, says CoBank in its latest outlook.
"Fundamental factors like tariffs and weather conditions in key agricultural producing regions often dominate market dynamics despite currency headwinds or tailwinds and should not be discounted", warns CoBank's Knowledge Exchange division.
US agricultural exports are largely expected to continue a faster pace in 2021 with help from weakness in the U.S. dollar," said Tanner Ehmke, manager of CoBank's Knowledge Exchange. "But our research indicates that some agricultural commodities like grains, oilseeds, and cotton will face a currency headwind."
After a challenging currency environment in 2020, US animal protein exports are expected to benefit from a modest tailwind fueled by a weaker US dollar in 2021. The outlook for a stronger Australian dollar and euro should make US beef and pork exports the largest beneficiaries in the coming year.
Beyond currency, other drivers signaling a good year for US protein exports in 2021 include less disruption to US meat processing capacity, the rebound in global foodservice demand, and the upward trend in China's meat and poultry imports, says the report.