A new report from the Rabobank Food & Agribusiness Research and Advisory group, “Chickens, Cows and Pigs…Oh My! Implications of Record U.S. Protein Expansion,” explores the impact of growth on the future of the market has just been released.
As U.S. protein producers are currently seeing record growth in demand, prices over the next couple years are predicted to fall. Production of protein in the U.S. is projected to grow at a rate of 2.5 percent annually. However, after a 5 percent jump in consumption within the domestic market, there are still many questions about demand at home.
“While we don’t foresee margins falling to the lows of 2008 and 2009 as prices decline through 2018, any producer considering a possible sale or divestiture should move quickly, as the outlook for margins and valuation multiples isn’t moving in their favor,” notes report author and Rabobank senior analyst Will Sawyer.
The report finds the next couple years will be significant for all protein markets due to the strengthening of the dollar. Specifically against currencies such as the Canadian dollar, Japanese yen, and Mexican peso.
“2015 saw the largest increase in U.S. per capita meat consumption in 40 years. We expect growth to taper in the coming years (2016 through 2018) and for it to be much more evenly weighted between the three proteins,” says Sawyer.