Meat Markets COOL off
The US livestock industry is reeling from a recent decision by the World Trade Organization (WTO) that could restrict US meat exports. The WTO ruled against a current US law, known as country-of-origin-labeling (COOL), which mandates food labels that indicate where foods are produced.
For the meat industry, these regulations are especially onerous, as individual animals might be born in one country, raised in another, and slaughtered in a different country, necessitating tracking of individual animals in order to make the label compliant.
Canada and Mexico, two of the United States' largest trading partners, have argued that these labels hurt their ability to sell cattle and hogs to the United States, as US producers shy away from buying foreign animals due to the expense of tracking.
The WTO agreed with Canada and Mexico and has decided that those nations have a right to levy as much as $1 billion in tariffs against US products in retaliation. It is expected that these tariffs could begin to be enforced within the next week and could severely hamper America's ability to sell pork and beef to Canada and Mexico, who account for nearly one-third of US pork and beef exports.
As a result, US livestock prices took a dive Monday, especially cattle, which fell to a three-year low near $1.18 per pound during the week. Without intervention by US politicians, US meat exports could be stuck in a deep freeze.
Crude Cracks $40.00
Crude oil collapsed to new lows on Monday as major global producers have been unable to halt the flood of crude and natural gas yet either, so prices entered a "free fall," even though the selling price for most producers is now well below the cost of production.
Like the celebration of a 40th birthday party, the drop below $40 per barrel is bittersweet; many will tout the benefits, while others will fear awful things to come.
Since the cost of energy is a major component of manufacturing, agriculture, housing, and transportation, many companies benefit from declining costs.
On the other hand, those depending on income from the sale of petroleum are in panic mode. Companies, states, and even countries might go broke if prices remain below $40.00.
By mid-day Friday, January crude oil had slid to $35.75 per barrel, the lowest price since 2009.
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