Here are key factors I believe have a major impact on U.S. livestock and therefore U.S. crop profitability.
-
An expanding U.S. economy with a rising Gross Domestic Product: An economy that is expanding creates more jobs and increases consumer purchasing power. This creates more meat and grain demand. What's good for consumers is ultimately good for U.S. farmers.
-
Low or lower trending energy prices: Most consumers have two monthly variables — energy and food costs. As energy prices go up the amount of money available to buy meat goes down. Restaurants are first to be hit; red meat purchases second. Lower gas and fuel costs leave more money for food.
-
Increasing consumer confidence: When consumers are secure in their jobs — and able to work overtime — much of the extra money in their paychecks is spent on eating out and on additional red meat purchases.
Right now the U.S. economy is improving, more jobs are being created and consumer confidence is improving. The one important unknown: the impact of the high cost of energy.
