Something other than the cwb

[poorboy]

Cottonpicken,

You have been promoting higher ag prices for quite a while now and today you are indicating that the price of wheat, corn, soybeans, etc is going to climb in price, due in a large part to the fact that the US dollar is losing strength. I am assuming that the canadain dollar is going to be stronger then, so if farmers don't do anything about a currency hedge then when wheat hits $10/bushel it may be in US$, but the same $5.00/bushel Canadian as today.

What is the prediction on interest rates. If US dollar drops and economy goes into recession and interest rates climb, is it going to pull Canada along and cause higher interest rates here, or are we just going to have a higher dollar and low rates, attracting lots of foreign investment that used to go stateside.

I always welcome views and explanations that everyone has for future outlooks. Sometimes I find that I get so wrapped up in my own little world, that I am missing the big picture.

[cottonpicken]

Poorboy,the canadian dollar is gaing strength because commodities are riseing.If our dollar is higher we have a higher purchasing power on things we import so it is kind of a wash in terms of what we are getting paid.

The u.s fed is between a rock and a hard spot on there interest rates.If rates rise to contain inflation and support the dollar they risk major damage to their economy because of all the debt out there.If they cut rates the dollar is toast and foriegners will stop buying us treasury instruments.
Its hard to say what might happen but for the "foreseeable" future the Us dollar is going down and liquidity will be going into commodities.IMHO.

[poorboy]

If the price of wheat on US futures goes up and our CDN $ goes up up the same time, the price of wheat in Canadian dollars per bushel in my pocket may be the exact same. So a huge rally in grains, may not mean any more money in my pocket, unless the currency risk is accounted for. I am not a trader, so I am wondering how big of a risk the change in the dollar really is in everyones eyes.

I an in the business of hopefully selling more product than buying, so the dropping US dollar is of a major concern to me. Part of the reason that historic farm payments have been so high in the US is because their dollar was so strong that it hurt the farmers income substantially. If we were to take a CDN $ at par or 5% above a US dollar it would hurt canadian farmers big time, unless there was such a huge shortage of food that prices finally rise like the oil does. Food prices need a major shortage scare to make people want to price it ahead more than now. I don't know that anyone in the world actually ran out of gas or oil in the latest rally's but the perception that they might has sure caused the price to climb. Shrink these grain inventories even more and hopefully we will see some fun times in agriculture.

[cottonpicken]

What is happening now has already happened in the past.
In the 70's early eighties we had a strong dollar and strong commoditie prices.
The u.s farmer has been stuck with a strong dollar and week commoditie prices.
The reason the our dollar is getting stronger is the higher commoditie prices.
The most important thing to a producer is the price he recieves for his product.It is his "leverage".

"give me a long enough lever and i'll move the world"