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Texas Agriculture Archive

July 5, 2002

MARKETING

 

By Bryce Myrick
Director, TFB Agricultural Marketing Education

Where is the dollar leading U.S. agriculture? Exporting our surplus agriculture products is the key to surviving in agriculture. Without exports, our supply would be about 35% above domestic demand. All too often producers say we should stop importing ag products. How would we survive if countries stopped importing our ag products?

One major factor that has worked against exporting any products has been the strength of the dollar. A strong dollar makes it harder for other countries to purchase our exports. A 10% decrease in the dollar normally would increase corn prices by $.15 to $.20 a bushel. While the dollar has decreased about 9% since January, we have not realized an increase in grain prices.

With the Japanese Yen and the Euro Currencies increasing and the dollar decreasing, this seems favorable for U.S. ag exports. The problem is the Brazilian Real has fallen 13-15%, allowing countries to buy Brazilian ag commodities at a lower price. Also, the Mexican Peso has decreased about 7% which hurts them when buying U.S. commodities.

If we can help you understand the impact currencies have on commodities, please give us a call.

U.S. Dollar index

Fundamentals: U.S. Economy Continues to Drift Lower.
Technical Analysis: Trend—Down/Resistance—120.00/Support—108.09

Brazilian Real
Fundamentals: Brazilian Economy Effect By Argentina Problems.
Technical Analysis: Trend—Down/Resistance—43.80/Support—None, Broke
Support at 35.33

Mexican Peso
Fundamentals: Fox Having Difficulty Implementing Programs
Technical Analysis: Trend—Down/Resistance—11.10/Support—None

Japanese Yen
Fundamentals: Economy Strengthening.
Technical Analysis: Trend—Up/Resistance—.8595/Support—.7420