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Economists say ag exports pressured by multiple factors

An ag economist says it isn’t just the stronger U.S. dollar that’s been hurting ag exports.

Stephen Nicholson Global Strategist with RaboResearch says there are other factors coming into play.  “You know, record corn and soybean production out of Brazil and so they’ve been extremely competitive in the marketplace,” he says.  “And also Russia’s record wheat production and record wheat exports have also been tough on anyone else trying to compete in that marketplace going forward.”

He says he doesn’t anticipate the dollar moving from its current level anytime soon. “Because the Fed is extremely concerned about inflation and it doesn’t want inflation to get away from us, I think that will be supportive to the dollar,” he says.  “People will flock to the dollar to buy the dollar because its interest rates are favorable from an investment standpoint of view.”

Sam Taylor, senior analyst for farm inputs says the Brazilian Real has also been a factor. “The Real had actually been outperforming the dollar and so that’s an important thing to keep in mind,” he says.  “Yes, the strong dollar would have put pressure on exports, but you think about what your alternatives are, Brazil being an obvious one, they were increasing interest rates.”

Nicholson says the current tight domestic supplies are also supporting prices and are likely having a bigger impact on exports of U.S. commodities.