Dollar’s Drop Means Good News for Farmers02/08/2016
Skip right past Friday’s drop in the grain, soy and livestock markets and look at the bright side this week: the U.S. dollar weakened at last.
“In the first three days of the week, we lost as much in the days as we gained in three months,” said Jerry Gulke of the Gulke Group, speaking with Farm Journal Radio’s Pam Fretwell. “That’s pretty volatile.”
It’s also a pretty welcome development for farmers worried about U.S. ag exports being too expensive on the world market.
“That’s good news for us,” Gulke said. “We cannot stand a stronger dollar than we had. Now we are theoretically more competitive than we were a week ago in the export market from the U.S. standpoint. Now we just need to keep it down there and begin a trend of a lower and lower dollar.”
Gulke sees other signs of hope in the market. Argentina’s currency is weakening as well, which might make Argentine farmers think twice about unloading their soybeans.
“It puts a little tightness” in the market, he said. “It’s not exactly like everyone thought it would be.”
He also highlighted the latest with the funds, whose buying and selling decisions also affect the market.
“They’ve been really exiting our production, but really all commodities,” said Gulke, but the money flow might be changing again. “Anytime you get commodity prices below the cost of production, it becomes just a matter of time before you start to curb supply.”
Getting the funds back in the game wouldn’t be such a bad thing for farmers in search of higher prices, according to Gulke.
“We need those speculators,” he says. “We think they make the markets go down, but they also make the markets go up.”
Source: Alison Rice, AgWeb.com