With gasoline prices cut in half, in comparison to last year, American consumers have more money in their pocket. According to Kansas State Extension Livestock Market Economist Dr. Glynn Tonsor said that means for more money for discretionary buying purchases, like beef.
“Going forward we expect that to show up in the form of higher prices basically,” Tonsor said. “That has definitely helped the entire protein complex. That’s the reason to be bullish on the demand front.”
On the flip side, lower prices for crude oil will negatively impact key exporting partners. Tonsor said countries like Russia that are dependent on oil income are likely import fewer protein pounds because of the hit to their economy. Overall Tonsor sees lower oil prices to be bullish in terms of reducing the cost of doing business, increasing consumer income, which will result in higher protein demand domestically.
In the meantime, the nation’s Country of Origin labeling policy remains under review by the World Trade Organization. Tonsor said it’s hard to determine a timeline for a ruling, but there is limited support for the policy.
“The message has been pretty clear from the WTO multiple times, that it is not trade compliant,” Tonsor said. “There is a growing, I would call groundswell, of push back against COOL within production ag domestically. I think there is political pressure to change something with it. But in terms of timelines, I have learned a lesson and I will not make any predictions on timelines because this could go on for a lot longer than a rational mind like me might expect it to.”
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