(Photo courtesy of Sharon Drummond via Flickr)

Lower Loonie Supports Canadian Ag Commodity Prices

Farm Credit Canada economists say this country’s commodity prices are getting support from the declining value of the Canadian dollar.

FCC Economist Leigh Anderson points out most globally traded agricultural commodities are priced in U-S dollars.

That means farmers should keep an eye on the value of the Canadian dollar as it may have an impact on the returns they had budgeted for.

Anderson says an increase in interest rates south of the border could cause the value of the Canadian dollar to drop further, providing support to crop and livestock prices here.

He suggests that should provide strong demand for Canadian agricultural commodities and agri-food products.

FCC’s economists believe the Canadian dollar will remain below 80 cents American – given current oil prices, the latest Bank of Canada rate cut and the possibility of an interest rate increase in the U-S.