Lower loonie helps farmers, but only so much

CNS Canada — The slumping price of oil continues to weigh on the Canadian dollar, while at the same time providing a boost to Canadian grain prices.

Out-of-country buyers tend to more attracted to Canadian grain and wheat when the loonie is low, as they can get more product for their money.

However, one market watcher pointed out the net benefit to Canadian farmers is really tied to where buyers are.

“It always comes back down to what other currencies are doing,” said Mike Jubinville of ProFarmer Canada.

Some countries, major grain exporters themselves, are also watching their currencies plummet relative to the U.S. dollar, he said.

So while the downward action of the loonie might appear to open up large trade windows for Canadian grain, those windows are still smaller than for countries in South America and the Black Sea region.

“The Russian ruble fell far faster than the Canadian dollar, so they’re in a more price-competitive position to compete in the offshore market, as are the Argentine farmers, Brazilian and Australian.”

Another analyst felt the loonie will see firmer ground soon.

“There’s going to be a rebound in the Canadian dollar and it’ll be when the U.S. dollar breaks down,” said Errol Anderson of ProMarket Communications in Calgary.

“The U.S. dollar, at some point, in my mind, will start to break down because the U.S. is at risk of recession.”

Commodity markets are full of emotion and fear right now, but eventually will make a solid push upward, he added.

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Dave has a deep background in the radio industry and is a graduate of the University of Winnipeg. He lives in Winnipeg with his wife and two beautiful children. His hobbies include reading, podcasting and following the Atlanta Braves.

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