Brexit and What it May Mean for U.S. Farmers -- Part 2

Brexit and What it May Mean for U.S. Farmers -- Part 2

With the recent the decision of the United Kingdom to leave the European Union, there have been a lot of questions of what this will mean and how it will affect U.S. farmers. Today is the second of a two-part story about how U.S. farmers may feel the affects of Brexit. Rabobank AgriFinance’s Grain and Oilseed Analyst Steve Nicholson says in addition to causing market volatility, Brexit also has impacted the strength of the U.S. dollar.
Nicholson: “The dollar has been strong, relative to where it has been. I think we need to make sure we understand that — it is strong relative to where it has been. In my view it isn’t over valued — the dollar it is trading today where it has been over the last 40 years on an average basis. We’ve been this 92 to 100 range if you look at the dollar index. With that we’ve been trading that 92 to 95 area on that lower range — in our view this is going to bump it up into that range and keep it strong. But I should say one of the problems with the dollar is that it is going to be strong because one — it is the only safe and secure currency in the world at the moment. Also if you look at our competitors — from an agricultural view — whether it is Brazil, Argentina or Ukraine or Russia particularly if you are going to look at wheat — their currencies are very, very weak and in essence the spread between their currencies and ours is at a very wide place.”

 

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