58 • URNER BARRY'S REPORTER / VOL. 18, NO. 4 / FALL 2023
Fluctuations between the peso and the
U.S. dollar throughout the year have
caused a significant challenge for Mexican
beef exports. The year initially seemed
to be pushed by rising cattle production
costs, increased demand, and reduced
production in the U.S. However, 2023
has not developed as expected. While
this year has seen a notable increase in
prices paid for most Mexican export items,
which has kept them at levels above 2022,
the intermittent exchange rate and its
continuous downward trend have resulted
in both beef sellers earning less income
and losing competitiveness against other
countries exporting beef to the U.S.
What is driving the peso's strengthening against the dollar?
Factors such as the interest rate differential between
the Mexican central bank and the U.S. Federal
Reserve, the rise in remittances, and increased foreign
investment, particularly in nearshoring strategies,
have been some of the elements that have boosted
the Mexican peso to gain ground against the dollar,
showing exchange rates not seen since 2015.
In December 2022, the Bank of Mexico published its
exchange rate expectations, forecasting a minimum
value of 19.58 and a maximum of 22.01 pesos per dollar
for the month of July 2023. However, the current levels
are significantly different from those predictions, with an
average exchange rate of 16.85 pesos per dollar displaying in
July. In other words, roughly 14% below the projected rate.
How does this impact Mexican exports?
The answer is simple: Fewer pesos are obtained for each dollar sold, and this
means less pesos in hands of sellers to keep their companies running.
As a result, some exporters have started exploring domestic Mexican market
alternatives for certain products. For example: The knuckle has consistently
showed high demand in the domestic Mexican market, with price levels slightly
higher with those of boxed beef in the U.S. While the knuckle reached a price of
$3.14 per pound in the U.S. boxed beef market, it consistently sells in the domestic
Mexican market at $3.52 per pound, an 11% higher price. However, when comparing the 2023
price, considering the Bank of Mexico's projected exchange rate of 20.41 pesos per dollar,
A challenge for Mexican beef exports…
Exchange rate impacts
Mexican export market
$2.60
$3.10
$3.60
$4.10
$4.60
$5.10
$5.60
$6.10 Jan Feb Mar Apr May Jun Jul Aug
$/lb.
2023 MEX 2023 U.S.
Urner Barry 174 Short Loin for Export
Source: Urner Barry
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