By Sarina Locke ABC
Excitement is building that the Australian dollar might fall further and deliver better export returns to agriculture.
At lunchtime, the dollar fell to 97.9 US cents, after weaker consumer figures were released in Australia.
It’s fallen six cents in three weeks, largely with a strengthening in the US dollar.
Returns for dairy, beef and horticulture exports lift with every cent the dollar drops against the greenback.
Speculation is building that the US Federal Reserve will announce a reduction in the stimulus package, which will push up US bond rates and strengthen the US dollar.
Dairy trade gets a lift given 40 per cent of production is exported.
Charles McElhone at Dairy Australia says a five-cent depreciation over a year equals a significant rise of 2.2 cents a litre or 30 cents a kilo of milk solids.
Horticultural exports worth $540m would have benefited if it had happened earlier, instead of the end of the selling season. David Minnis, president of the Exporters Council, says for “most of the season we’ve traded over $1.05 to US, and many of our competitors took advantage of our discomfort and made inroads into South East Asia”.
“Many exporters are still receiving final payments, and they will welcome this fillip in the lower dollar, for example, table grapes 5-7 per cent increase or several million dollars.”
For meat, it’s said every cent change equals $60 million either way. Meat and Livestock Australia’s Tim McRae says a weaker dollar is not as important as rain, and the prolonged dry has forced more cattle onto the market. He says meat exports have hit record levels, with 15,000 tonnes of manufacturing beef expected to go to China.
“May is heading for the highest exports ever.
“But the one thing that can help will be rain, and we’re watching this system come over central Australia.”