Currency is one of the major factors currently determining the winners and losers in agriculture. A major topic of discussion within agricultural circles is the appreciation of the US dollar versus the currencies of its major competitors. It is important for farmers, producers and agricultural businesses to understand the wide-ranging impact that currency has on agriculture, and then to make informed decisions from that knowledge, managing risk accordingly.
Among the top concerns of US producers is that of exports. Many are concerned that the country’s agricultural exports will decline as a result of the appreciation of the U.S. dollar, since US commodities will be priced out of the market.
Many factors involved
There are many factors to consider when we look at the propulsion of the US dollar as compared to other major currencies. The US dollar has been weak over the past eight years. Much of this weakness has been due to monetary policy, record-low interest rates and quantitative easing.
The changes in currency values have varying impacts—by commodity, by country, along with implications for production, trade flows and investment. While the US dollar has appreciated in value, the opposite has occurred with the currencies of the country’s major agricultural competitors—the Argentine peso, Brazilian real, Ukrainian hryvnia and the Russian rouble.
Lower prices = competitive environment
For end users or buyers of commodities, declining commodity prices will help ease the margin pressure of the past several years and, at the same time, create an extremely competitive price environment.
Click here to download the new Rabobank report 'Making (Ex)Change: The Impacts and Implications on Agriculture of an Appreciating US Dollar’, which explores the impact changes in currency have on agricultural production, commodities, flow of capital and cost of production.
Download the full report
Where to go from here
Jefferson CarvalhoAnalyst - Farm Inputs, Coffee Read more
Lief ChiangAnalyst - Grains & Oilseeds
Victor IkedaSenior Analyst - Grains & Oilseeds
Sterling LiddellSenior Data Analyst
Renato RasmussenSenior Analyst - Grains & Oilseeds
Paula SavantiSenior Analyst - Consumer Foods
Kenneth ZuckerbergSenior Analyst - Farm Inputs Read more
A Golden Outlook for a Golden Year: Australian Winter Crop 2021/22 Production, Price, and Inputs Forecast
Brazilian G&O Monthly Update – October 2021
Podcast: Can Canola Be the Crop That Keeps on Giving for Australia?
The Impact of EU Road Transport Decarbonization on Biofuels, G&O, and Sugar: An Outlook Toward 2050