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Loonie the No. 1 Trend to Watch in Agriculture: FCC

The Canadian dollar will have the biggest – and a mostly positive – impact on Canadian agriculture in 2017, according to Farm Credit Canada (FCC).

In its annual list of main industry drivers farmers should keep an eye on in the New Year, FCC said the loonie will impact every business across the entire agri-food supply chain in 2017. “Varying against the relative value of the American dollar, it can uniquely drive profits either higher or lower and is therefore our No. 1 trend to watch.”

To that end, FCC forecast the loonie in 2017 will pick up right where it left off in 2016: It will be a generally positive trend for Canadian agriculture, remaining below its 5-year average of 88 cents US, and hovering around 75 cents throughout the year.

“Watch the loonie in 2017. It could easily have the largest impact of all possible trends and drivers on the profitability of Canadian agriculture and agribusiness throughout the year,” FCC said. “It’ll certainly show up in the prices Canadian ag producers will get and ultimately, their farm cash receipts. A low loonie makes Canadian manufactured food products more competitive in foreign markets, and domestically, it’ll help shield Canadian firms from foreign competition.”

Meanwhile, FCC also compiled a list of four other drivers it believes will also impact Canadian agriculture throughout 2017.

  1. Energy prices

The West Texas Intermediate oil price benchmark is expected to remain around the US$50 per barrel threshold. Commitments to cut oil production by major oil producing countries strengthened the outlook for oil recently. But there are serious questions about the likely supply and strength of demand throughout the year.

  1. Commodity prices

With production growth and high ending stocks the big story for 2017, commodity prices aren’t likely to get much better for Canadian producers. Will lower commodity prices keep consumption and export demand strong enough?

  1. Investment landscape

The U.S. Federal Reserve chose to hike its key interest rate in December. Interest rates should rise both in the U.S. and Canada, but it’s the spread between the different rates that matters. With an outlook for this spread to grow slightly in 2017, how much investment potential will the Canadian economy hold?

  1. Global economy

The global economy will be a bit of a wild card in 2017. It’s going to impact demand for ag commodities. But as China-U.S. trade flows evolve, the question of their capacity to influence commodity prices and the long-term health of Canadian ag exports remains.


Source: DePutter Publishing Ltd.

Information contained herein is believed to be accurate but is not guaranteed by the parties providing it. Thompsons, DePutter Publishing Ltd. and their information sources assume no responsibility or liability for any action taken as a result of any information or advice contained in these reports, and any action taken is solely at the liability and responsibility of the user.

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Canadian Dollar May Hang Tough Against a Hawkish Fed

The Canadian Dollar weakened against the USD as did the rest of G10FX when the Federal Reserve signaled a more hawkish/ steeper dot plot than expected. The Canadian Dollar had Bullish momentum backing it going into the meeting on the back of the December 7 Policy Statement where the Bank of Canada noted that they are focusing on slack that remains in the Canadian economy and omitted the “at present” phrase when discussing possible rate cuts to stimulate the economy. Read more

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Canadian dollar sinks below 88 cents as Saudis cut oil to $77 a barrel

U.S. produced more oil than Saudi Arabia last month

By Pete Evans, CBC News – November 4, 2014

The Canadian dollar today sank to its lowest level in five years as Saudi Arabia moved to slash its price for the type of oil used in much of North America to its lowest level since September 2010.

Late Monday, Saudi Arabia said it would start selling its oil in the U.S. market for the cheapest price it has offered in more than four years.

The loonie was down 0.41 of a cent to 87.63 US at the close of trading.

Oil prices have fallen sharply this year, particularly in recent months — the U.S. contract was trading at $100 a barrel as recently as July.

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