Export Demand Could Boost Prices in Coming Months Despite Strong Dollar

August 12, 2016 12:00 PM
Export Demand Could Boost Prices in Coming Months Despite Strong Dollar

The strength of the U.S. dollar has worried analysts and growers for several months. “When you have large inventories, a strong dollar is really bad,” explained Bill Biedermann, a market analyst with Allendale, talking with AgDay host Clinton Griffiths.

But those low inventories are also keeping prices low, boosting export demand and in the coming months, prices. “Our exports will be huge in the next couple of months because our price is so discounted,” Biedermann said. “Once we build the demand base, it won’t matter what happens to the dollar--we’ll start to go up in price.”

Why is the U.S. dollar so strong? Because the American economy is doing very well compared to the rest of the world, Biedermann said.  “We’ve got the almost-record employment, our housing market is tight and we’re running a 1.8% inflation rate,” he said. Meanwhile, Japan, Italy and Spain are facing negative deflation issues. When countries are facing economic problems like that, investors avoid investing in those currencies and turn to the U.S. dollar instead. “I think the dollar will stay strong for quite a while,” Biedermann said.


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