U.S. producers of beef, pork, chicken, and turkey may produce over 100 billion pounds of meat this year, a record that is causing a stomachache for markets.
Most U.S. livestock is fed a diet that is heavy in corn and soybeans, and low grain prices over the past few years allowed for rapid expansion of herds and flocks. Much of this expanded meat supply was intended for export markets, but recent trade disputes have cut off foreign demand, leaving the producers with nowhere to sell their extra supply.
Hardest hit was the hog market, as China and Mexico, the two largest buyers of U.S. pork, have both implemented tariffs against U.S. meat. These retaliatory tariffs sent hogs below 50 cents per pound, a devastatingly low price for hog farmers.
Meanwhile, the glut of meat should lead to bargain prices at the grocery for meat lovers.
This week, rumors circulated that Mexico may be close to a deal with the United States on trade, which briefly sent pigs flying higher by over 6 cents per pound (up 13 percent) in just two days, showing how volatile the markets can be.
USDA shows bigger crops
On Friday morning, the U.S. Department of Agriculture released its newest estimate of the size of this year’s crops. Despite some weather concerns, the USDA raised its projections for corn and soybeans, which sent markets tumbling.
By mid-session, harvest prices for corn and soybeans had fallen to two-week lows, trading for $3.75 and $8.67 per bushel, respectively.
Expectations for large crops, fewer exports, and a troubled livestock industry could keep prices in a malaise for the foreseeable future.
Turkey spoils, contagion threatened
The Turkish currency, the lira, is in a downward spiral, collapsing in value by almost 40 percent so far this year, with half of that loss coming this week.
The U.S. is pressuring Turkey with sanctions and tariffs over a series of political and economic issues. This has some political strategists worrying that this could push Turkey, a NATO ally, into the arms of Russia.
Meanwhile, economists are growing increasingly concerned that Turkey’s economic woes could harm European banks that are heavily invested in the developing country, spreading the economic contagion to European economies.
As a result, the eurocurrency collapsed below $1.14 on Friday, the lowest level in over a year.