A rising Australian dollar saw falls to in the value of some of Australia’s key agricultural commodities this week.
The Australian dollar gained in value because of news that the United States is not recovering from the Global Financial Crisis as soon as the market was expecting.
A rising dollar can mean pay cuts for Australian farmers who export their produce to the world.
Nicki Hutley, chief economist at Urbis, says she doesn’t know where the dollar is heading.
“Fair value (for the Australian dollar) most people would say is sort of 88 to 92 cents, say, give or take a bit.”
“This is about expectations rather than about fair value.
“Unfortunately, as an economist you can build the most precise model as you like, but you can’t stand in the way of hedge funds or market movers not necessarily driving the currency based on economic fundamentals.”
After big rises which saw records set for some indicators, wool markets finished down for the second week in a row.
The Eastern Market Indicator is 1,072 down 23 cents this week.
Big gains in the Australian dollar have put local grains markets under pressure.
It has been a sea of red, looking at port prices for Australian wheat.
According to Profarmer Australia, APW multigrade wheat contracts per tonne are:
Kwinana in WA is $277
Newcastle in NSW $280
And Geelong in Victoria $262
That’s down $20-30 a tonne in three weeks.
Canola prices have been down too, following harvest news of a bumper crop in Canada.
Butter and skim milk powder for Oceania exporters rose in US dollar terms this week.
Butter – US$4,300/t – US$4,700/t
SMP – US$4,390/t – US$4,690/t
Cheddar – US$4,350/t – US$4,650/t
(Figures from Dairy Australia)