WINNIPEG — The slumping price of oil continues to weigh on the Canadian dollar while at the same time providing a boost to Canadian grain prices.
Out-of-country buyers tend to be more attracted to Canadian grain and wheat when the loonie is low because they can get more product for their money.
However, Mike Jubinville of ProFarmer Canada said the net benefit to Canadian farmers is really tied to where the buyers are situated.
“It always comes back down to what other currencies are doing,” he said.
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Jubinville said some countries that are major grain exporters themselves are also watching their currency plummet relative to the U.S. dollar.
So while the downward action of the loonie might appear to be opening up large trade windows for Canadian grain, they are still smaller windows than countries in South America and the Black Sea region.
“The Russian ruble fell far faster than the Canadian dollar, so they’re in a more price competitive position to compete in the offshore market, as are the Argentine farmers, Brazilian and Australian,” said Jubinville.
Errol Anderson of ProMarket Communications in Calgary said the loonie will see firmer ground soon.
“There’s going to be a rebound in the Canadian dollar and it’ll be when the U.S. dollar breaks down,” he said. “The U.S. dollar at some point in my mind will start to break down because the U.S. is at risk of recession.”
Anderson said commodity markets are full of emotion and fear right now but eventually will make a solid push upward.
