Other factors include global economy, supplies, competitors

By DAVE WILKINS

Capital Press

The recent decline in the U.S. dollar may come with a silver lining for farmers and ranchers.

"Generally a weak dollar is good for agriculture because it increases our exports," said Paul Patterson, a University of Idaho Extension ag economist.

The dollar recently hit a 14-month low against a basket of other world currencies, including the euro, the Canadian dollar and Australian dollar.

A weaker greenback makes U.S. products cheaper for foreign buyers, but it doesn't guarantee an increase in exports for any particular commodity. Much depends on the economy, global supplies and the value of the U.S. dollar in direct comparison with export competitors, experts said.

The global financial crisis and resulting recession -- the worst since the Great Depression -- are also big factors at play right now.

"A weak dollar will not increase (export) demand, but it will change how competitive the U.S. is in meeting that demand," Patterson said.

The USDA recently lowered projected exports for U.S. wheat and corn for the 2009-10 marketing year by 50 million bushels each based on larger supplies held by major export competitors.

Increased supplies of feed grains in Canada and larger world wheat supplies are expected to increase competition for U.S. corn exports, the agency said in its supply and demand estimates report released Oct. 9.

The USDA raised projections for Canadian wheat exports by 1.5 million metric tons to 18.5 million metric tons. U.S. wheat exports are projected to be 24.5 million metric tons.

The U.S. appears to be hanging onto its market share despite the recession.

U.S. wheat exports are projected to be 20 percent of the world total this year, unchanged from the 2008-09 marketing year.

Erick Erickson, special assistant for planning, evaluation and projects at the U.S. Grains Council, said it's difficult to link movement in the global grain trade to currency fluctuations alone.

"In general the weakening U.S. dollar makes U.S. ag exports more competitive around the world," he said. "But it's only one factor in figuring what our market share is going to be. It's also a function of what is available elsewhere."

Global currencies have fluctuated almost as wildly over the past year as commodity prices.

The U.S. dollar appreciated 15 percent against its major trading partners from July 2008 to March 2009 as investors, spooked by the global financial crisis, sought safety in U.S. Treasury bonds.

The recent decline in the dollar has been cheered by those marketing U.S. potatoes to foreign buyers.

U.S. exports of frozen potato products totaled 792,500 metric tons from July 1, 2008, through June 30, 2009, an increase of 4.2 percent from the previous 12-month period, according to government trade data.

Frozen potato products, including french fries, account for about 60 percent of total U.S. potato exports by value.

"The stronger dollar put us at a disadvantage there for a while," said John Toaspern, vice president of international marketing for the U.S. Potato Board.

The weaker dollar is good because it takes some of the edge off U.S. frozen potato prices, which have been higher than competitors' products, Toaspern said.

Staff writer Dave Wilkins is based in Twin Falls. E-mail: dwilkins@capitalpress.com.

 

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