Outlook and Predictions:
- Tariff uncertainty is now in the rearview mirror. Regardless of the U.S. Supreme Court ruling, the shock and uncertainty are behind us. Over half of U.S. imports remain tariff free. The impact on meat and livestock is now minimal. Note Mexico’s threat of dumping duties on U.S. pork; we see it as a 50/50 chance with limited effects due to the co-dependence on U.S. hams to Mexico.
- U.S. / Mexico / Canada FTA up for review. Trump has historically attacked Canadian dairy programs (supply management) that limit imports. It also applies to poultry and eggs. It’s a national quota supply system that would be difficult to dismantle.
- Do we see new details on Trump’s “Framework Agreements”: Thailand, Vietnam, El Salvador, Argentina, Ecuador, Guatemala, United Kingdom, European Union, Switzerland, Malaysia, Thailand, Indonesia, Korea, Japan, and the Philippines? No details yet on meat, livestock, grains or agriculture. Will these negotiations continue?
- Continued strong global meat and poultry demand continues due to 78 mil/year global population growth and US$3 trillion GDP growth annually over the next decade.
- Tightening global beef supplies. How does the rebuild emerge in the U.S., Brazil, and Australia? All three nations have been in liquidation mode in recent years. All are expected to turn to restocking in 2026/2027, tightening cattle supplies and pushing global prices to new record highs. U.S. cattle and beef prices recover back to new record highs. Australian cattle, lamb prices surge toward 2027 highs.
- Persistent U.S. inflation to continue based on the U.S. Federal Reserve Board’s continued rate cuts and heavy global corporate/consumer cash post-COVID.
- Does China enter a hog cycle due to their persistent weak pricing? Typically extended financial losses lead to hog liquidation which leads to tighter supplies and price surges. China hog prices remain low with limited government support. Down-sizing likely to stabilize markets by yearend. Over-liquidation unlikely.
- Do feed grain and soybean acres decline, bringing margins back into profitability? Do not expect feed prices to remain below the cost of production for more than a crop year. Will U.S. government subsidies be sufficient to stave off planting reductions? They haven’t yet.
- China to announce findings of their beef safeguard investigation. They will likely to impose country-specific beef tariff safeguards with tariffs applied above certain levels. Tariffs expected to be less than 15%.
- More sustainability actions. The EU Industrial and Livestock Rearing Emissions Directive (IED 2.0) report is due later in 2026 assessing the carbon emissions of imported meat from foreign livestock.
Wildcards:
- Brazil imposed a risky FMD-Free plan, halting vaccinations. Does it work? Do they get beef deals with Japan, Korea
- Does the U.S. Supreme Court rule Trump’s “Emergency Tariffs” unconstitutional? And can he effectively swap them to other executive powers?
- African Swine Fever. The global spread continues. Does Spain get it stamped out? Do we see further spreading of the Caribbean ASF outbreaks?
- Other disease issues? Avian Influenza (HPAI) in poultry, potential spillover into dairy cattle, swine (and people)? Lumpy Skin Disease (LSD) remains a threat to Australia from Indonesia, as well as to other nations.
- South American weather has been less than idea for corn and soybeans thus far. Stay tuned.
~Brett Stuart