Weak U.S. Dollar benefits some agriculture commodities, but not all
Published Mar 2, 2021
Tridge summary
The value of the U.S. dollar weakened substantially since March 2020 and is expected to experience modest deflation in 2021. A weaker dollar generally makes U.S. agricultural products more competitive on the global export market. However, not all commodities are affected equally given the diversity in global export competition and foreign exchange rates.
Original content
Fundamental factors like tariffs and weather conditions in key agricultural producing regions often dominate market dynamics despite currency headwinds or tailwinds and should not be discounted, according to a new report from CoBank’s Knowledge Exchange. “U.S. agricultural exports are largely expected to continue a faster pace in 2021 with help from weakness in the U.S. dollar,” said Tanner Ehmke, manager of CoBank’s Knowledge Exchange. “But our research indicates that some agricultural commodities like grains, oilseeds, and cotton will face a currency headwind.” CoBank’s estimates on commodity-specific trade weighted balances reveals a nuanced view of currency implications for U.S. agricultural exports in 2021. Animal Protein After a challenging currency environment in 2020, U.S. animal protein exports are expected to benefit from a modest tailwind fueled by a weaker U.S. dollar in 2021. The outlook for a stronger Australian dollar and euro should make U.S. beef and pork exports ...
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