Weak U.S. Dollar benefits some agriculture commodities, but not all

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. 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 ...