Over the past year, the value of the U.S. dollar has weakened substantially, which according to CoBank has made several American Ag products more competitive globally. Tanner Ehmke manager of CoBank’s Knowledge Exchange Division pointed out, not all commodities are affected equally.
For example while prices have increased as of recent, the wheat sector has not benefited from a weaker U.S. dollar this year. In fact Ehmke says the U.S. dollar remains strong compared to other wheat producing nations, such as Russia and Ukraine. But one commodity that has benefited, dairy; specifically when head to head against New Zealand and the EU.
“What that means then is we’re going to have a currency advantage compared to the Europeans when we’re talking about exporting cheese, nonfat dry milk, butter, those kinds of products. The same thing with New Zealand. The New Zealand dollar, or the Kiwi, is expected to be stronger in the year ahead and that’s going to give us a currency advantage in some very important markets and emerging markets in Southeast Asia.”
Many economists are predicting the U.S. dollar will continue to weaken throughout 2021, but Ehmke says that’s far from a guarantee.
“If the U.S. economy rebounds and perhaps the world economy does not behave as we expect, let’s say for instance there is a slower than expected roll out of the COVID-19 vaccine that may slow global economic growth and may result in a stronger U.S. dollar.”
A CoBank anticipates that American animal protein exports are expected to benefit modestly in 2021.
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