Dan Basse warns grain growers to watch currency markets

GLOBAL GRAIN PAIN: US grains expert Dan Basse recommends farmers look to the Australian dollar for next season's price indicators.

GLOBAL GRAIN PAIN: US grains expert Dan Basse recommends farmers look to the Australian dollar for next season's price indicators.

Tasmanian grain growers have been warned to watch the Australian dollar to understand its impact on grain prices for next season.

US grains expert Dan Basse, who is in Australia as part of Rabobank’s Visiting Experts Program, said in a “world awash with grain”, Australian grain prices will be largely dictated by the value of the Australian dollar.

“Over the past three years we have seen the Australian dollar fall by around 24 per cent against the US dollar, and it has been this currency shift that has helped underpin Australian grain grower revenues and incomes,” Mr Basse.

While the Australian dollar is expected to depreciate further within the next few years, the US dollar looks set to remain in a bullish phase, which will help underpin Australian grain prices in the global market, he said.

“There are no longer ‘levers that can be pulled’ to return balance to the global grains market, which remains burdened by record wheat, corn and soybean stocks.”

“In years gone by, we saw low grain prices and low profitability essentially correct itself by the EU and US reducing acreage. However changes to US farm income support and EU Cap reforms ensure this is no longer the case,” Mr Basse said.

In addition, the Black Sea and South America have also “changed the global grains landscape”, with Russia now establishing itself as the world’s largest exporter, despite once being the largest importer of wheat.