Rabobank Releases Report Exploring Changes in U.S. Dollar and the Impacts on AgricultureThu, 27 Aug 2015 10:22:44 CDT
A new report from the Rabobank Food & Agribusiness Research (FAR) and Advisory group analyzes the implications of an appreciating U.S. dollar. The report finds 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 U.S. 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 U.S. 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 U.S. commodities will be priced out of the market.
According to report author Steve Nicholson, Senior Analyst with the Rabobank Food and Agribusiness Research and Advisory (FAR) group, there are many factors to consider when we look at the propulsion of the U.S. dollar as compared to other major currencies. The U.S. 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,” notes Nicholson. “While the U.S. 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.”
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.
The new Rabobank report, “Making (Ex)Change: The Impacts and Implications on Agriculture of an Appreciating U.S. Dollar,” explores the impact changes in currency have on agricultural production, commodities, flow of capital and cost of production.
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