Japan dominates U.S. pork trade, but will a weakening Japanese Yen make it difficult for the U.S. pork industry to return to profitability later this year?
According the Daily Livestock Report, Japan consumers love U.S. pork. The country made up nearly one-third of all U.S. pork exports last year, accounting for $2 billion. However, since November, the value of the Japanese Yen against the U.S. Dollar has taken a nose dive. This drop won’t be quickly rectified.
Instead, the Daily Livestock Report suggests that “it reflects a dramatic change in the stance of the Japanese Central Bank and the Japanese government. Japan is expected to become much more activist in its monetary policy, printing more Yen and embarking on easy money policies similar to those in the US, Europe and Britain.”
“The danger for US competitiveness in the meat trade is how other commodity exporting countries will respond to this change in Japanese policy,” the report continues.
In his recent Weekly Outlook, Purdue University Extension Economist Chris Hurt expanded on potential demand issues facing U.S. pork as the Yen continues to struggle.
“Adding to worries about the ability to sell pork into the world market is the on-going decline of the buying power of the Japanese yen, which has dropped by 12 percent in 2013 and by 16 percent since last October,” Hurt wrote. “Japan is the largest U.S. pork buyer, purchasing six percent of U.S. production volume in 2012. A decline in the yen makes U.S. pork prices higher in Japan by a similar percentage.”
Overall, Hurt warns that the pork industry “may not return to profitability in the spring.” See, “Spring Pork Price Recovery Threatened.”