After a major revision to employment data in August, analysts expected the Federal Reserve to accelerate interest rate cuts. However, strong economic performance tempered those expectations. According to CoBank, the base rate is projected to decline only to around 3% by the end of 2026, following four to five gradual cuts of 25 basis points each.
The report notes that the ultimate outcome will depend on broader economic dynamics and the political influence of the White House on monetary policy.
CoBank experts highlight that uncertain tariff policies, a sharp decline in immigration, and a surge in investments in artificial intelligence (AI) have complicated the interpretation of traditional economic data. Volatile import volumes, slower working-age population growth, and soaring stock markets distort the real picture of the U.S. economy.
“Political polarization has made public sentiment surveys unreliable in gauging actual economic conditions. A potential federal government shutdown and the suspension of regular economic reports would make business decision-making even harder,” said Rob Fox, Vice President of CoBank’s Knowledge Exchange.
Despite concerns that AI adoption could weaken the labor market, the report emphasizes that new technologies transform jobs rather than eliminate them.
“Today’s college graduates are already using AI to enhance their skills — that’s becoming a real competitive edge in the labor market,” Fox added.
Consumer demand for meat in the U.S. remains strong. According to Circana, retail sales of ground beef rose by 13% year-on-year in August, reaching $1.7 billion.
Cattle prices hit record highs in the third quarter, boosting rancher profits but squeezing processor margins.
In the pork industry, a smaller national herd has driven prices upward:
- Lean hog futures rose 20% year-over-year,
- Feeder pig prices jumped 48%,
- “Farrow-to-finish” profits reached $52.60 per head, the highest level since 2021.
The pork sector has now recorded 17 consecutive months of profitability, although export volumes have slowed slightly compared to the record-breaking year of 2024. Mexico remains the leading importer of U.S. pork.
High beef prices gave the poultry sector a chance to strengthen its market position. Retailers and foodservice chains heavily promoted chicken products, particularly fillets and strips. Broiler production is expected to remain elevated through late 2025, though profit margins may narrow as white meat prices soften.
In the dairy sector, farmers are increasingly profiting from beef-on-dairy calves — income from this source has quadrupled over the past four years, rising from $1 to $4 per hundredweight.
The U.S. dairy herd has reached its largest size in over 30 years, but a surplus of milk fat has pushed milk futures downward. Nevertheless, low feed prices and strong beef-related profits continue to incentivize high production levels.
Economic signals for U.S. agriculture remain mixed. On one hand, livestock production remains profitable; on the other, uncertain tariff policies, shifting market trends, and evolving monetary conditions create significant risks.
CoBank analysts conclude that the U.S. ag sector remains resilient, but continued adaptation to technological, political, and economic realities will be essential for sustained growth.
Source: PigUA.info, based on materials from ThePigSite.com