As the marketplace waits to see the effects of financial problems in Greece, Steve Nicholson of Rabo AgriFinance shares a few predictions about possible consequences for U.S. farmers.
“If Greece does default—and somehow they’ll figure this out. I have to be optimistic, a little bit, because it’s a big deal for the euro,” Nicholson tells "U.S. Farm Report" host Tyne Morgan on the "AgDay" Agribusiness Update segment. “It has a huge impact on the euro’s value. … It just puts more appreciation on the U.S. dollar, which of course starts a whole ripple effect as far as production in South America, what does it do to our export demand?”
It could also hurt struggling economies.
“We’ve talked about the BRIC countries—China, India, Russia and Brazil,” Nicholson continues. “Brazil’s not in very good shape. Russia’s not in very good shape. China’s OK, they’re still growing, but it’s all relative. And India’s probably the stellar there. So if things go bad in Greece and in Europe, then we continue to see maybe degradation of other economies around the world, and that’s not good for markets just as volatility.”
Another global issue that U.S. producers must watch closely is the prospect of a big soybean crop in South America.
“We have record stocks already, and if we produce more we’re going to have even bigger stocks going forward,” he says. “It’s going to put a lot of pressure on prices here for U.S. producers.”
On a more positive note, Nicholson sees sales opportunities for American farmers.
“Southeast Asia and also India are places that U.S. farmers and U.S. producers will market, particularly corn and soybean meal,” he says.
To watch the complete interview with Nicholson, click the play button below.