WINNIPEG — The recent climb of the Canadian dollar is creating some headaches for exporters in Canada, but the bulk of the jump is over, according to a market analyst.
“We’re working with an assumption of 80 cents for the rest of 2018,” said J.P. Gervais, chief agricultural analyst with Farm Credit Canada.
On March 19, the Canadian dollar was worth 76.32 U.S. cents but by April 18 that had jumped to 79.14 U.S. cents.
He said the recent rally in the value of the loonie was largely created by a rise in crude oil prices. However, that rise has largely topped out because of all the oil sitting in the United States and speculation that the Organization of the Petroleum Exporting Countries will keep its production cuts in place, he added.
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As for what that means for farmers, Gervais said most crop decisions were based this year on a 78 to 80 U.S. cent dollar, so there likely won’t be a need to reverse major planting decisions.
“Eighty-five cents is the point where you would have to think twice about the marketing plan and I don’t think we’re heading in that direction,” he said.
Gervais said the loonie could face some pressure in the coming months because of looming tax changes in the U.S.
He said the lowering of the corporate tax will generate job growth in the U.S. even while wages are on the increase.
Turmoil in Syria and the trade relationship between China and the U.S. will also be factors worth watching when it comes to the value of the dollar.
One issue that appears to have settled down is the ongoing saga of the North American Free Trade Agreement and its daily effects on the loonie, but Gervais said it is an issue worth watching because it will still have an effect on the exchange rate.
