The American dollar?

[cowman]

A guy tried to explain to me that feeders at $1 are in reality worth the same as the $1.20 price we were getting pre-BSE. The Canadian dollar is worth 20% more you see so we need to get 20% less to break even? Which makes sense I guess?
The only problem is I would expect that the things I need to buy should then also drop 20%? And have they? Well gasoline at the pump was $63.9 pre-BSE so I guess with a 20% drop it should be in that 50 cent range? Instead it has gone up to 73.9! But hey that is just a gas shortage thing right? But my power bill, my gas bill, my telephone bill haven't dropped either! Nor has anything else that I can think of?
So how is this strong Canadian dollar helping me buy anything cheaper?
And in fact this "strong" Canadian dollar continues to lose ground against just about every currency in the world except the American dollar! And what does that mean? Is everyone doing better than us? Have we tied ourselves to a house of cards just waiting to crash?
Gee I hope the Canadian dollar doesn't rise anymore...I don't think I can stand the prosperity!

[grassfarmer]

Can anyone explain to me how this 20% figure works. I don't have the exact figures in front of me, but 20% seems to me that the dollar would have had to risen at least 12 to 15 cents. Is that the truth?

[bombay_43]

I have heard something along the same line cowman. "Our prices are almost the same, when you factor in the exchange rate, and the drop in the US dollar." It was first stated in relation to grain prices. I even think that statement has come out of our governments office!

If that is true, and cattleman have to settle for less money for what they produce, then all our other working stiffs will probably be happy with a drop in their pay. Take a chunk right off of everyones paycheck next week!

For reasons none of us can fathom, the fact that the US dollar is dropping in contrast to other currencies, is somehow suppose to do us farmers some good!

My pocket book doesn't feel one darn bit better!

[rsomer]

The Canadian$ was $0.6242 on October 11, 2002, during that years fall weaned calf sales. Today it is $0.7508. That is an increase in the value of the Can$ over that period of time of 20.28%. Today, the Can$ value of any commodity in Canada which is based on a U.S price would therefore be expected to fall by 16.86% from what it was worth in October of 2002.
The change in the value of the dollar was $0.1266. That change represents a 20.28% increase of the smaller value of $0.6242 and a 16.86% decrease from the larger value of $0.7508. Hope that helps.

[blackjack]

THE AFFECT OF A RISING CANADIAN DOLLAR
"So what is the effect of a rising Cdn dollar on feeder prices? Even with a
closed border it is good to equate feeder prices back to U.S. dollars in order to compare this year to last. When the Canadian dollar broke above 70 in May,feeder prices were 1% below last year, although when converted to U.S.
dollars they were up 11% from 2002. Prices in U.S. equivalency throughout
the summer started to decline, but it should also be noted that very small
numbers of feeder cattle traded during June to September. August prices in
U.S. terms slipped below last year, down 4% before starting the climb upwards again. September’s Canfax 550 lb steer average in Canadian dollars was
down 5%, however taking the dollar in the mid-70’s into account it was actually 10% higher than 2002. October and November prices converted to U.S.
dollars were 12% and 19% higher than last year respectively. If the December
Canadian dollar was to average $0.7575 and if the Canfax December average
for 550 lb steers was $117 (88.63 U.S.), this price would still be 5% higher in U.S. equivalency than a year ago even though in Canadian terms the price is 11% below 2002. -LR"


This is just some information that I found in a Canfax report for December 19,2003. I don't know exactly what that means but something to decipher over.

[pandiana]

Doesn't this just mean that if Americans wanted to buy our cattle at our previous price they would have to pay 20% US more for them. Or, conversely, if they wanted to pay the same dollar value as they did last year, we would receive 20% less?

[cowman]

Phoned my County yesterday to see if they had any gopher poison. They did. $150 for a five gallon pail! Last year it was $110...so I guess they never heard that our dollar was worth so much more? Maybe all these various suppliers thing you add on 20% instead of deducting 20%?

[rsomer]

pandiana: It would seem that as the U.S. dollar drops the ability of the U.S. to import goods is decreased. However, in cattle as with many other industries Americans are the market so everyone else’s prices adjust to the American market.

Last year at this time the Canadian$ was trading for $0.6708, today at $0.7503. If all other things were equal our cheque for an animal exported to the U.S. would be 10.59% less because of the change in the value of the respective currencies.

Unfortunately, the Americans never buy cattle at our price, they buy them at their price.