Canadian Dollar Volatility a Key Marketing Factor for Ontario Producers

Volatility in the Canadian dollar has become a key marketing factor to watch for Ontario producers, perhaps even more so than futures market gyrations, says Steve Kell of Kell Grain Elevators. 

Kell, who provided an overview of the corn, wheat, soybean markets at the Ontario Agricultural Conference last month, said the decline in the loonie – which fell from just about 76 cents US to under 70 cents over the past year or so – added more than C$1/bu to the price of soybeans for Ontario producers over the same period. 

“The reason this is so important to us is there is no reason to expect anything to move the (soybean) futures market a buck,” he told the crowd. “The biggest potential volatility that we have in grain pricing right now is movement in the Canadian dollar, certainly in the past year.” 

As of Monday morning, the spot Canadian dollar was trading at around 69.82 cents US against the greenback. 

Because a significant amount of world agricultural trade is denominated in US dollars, the Canada-US exchange rate can have a major impact on farm returns on this side of the border. And while some inputs are more expensive with a lower Canadian dollar (including fertilizer, machinery imported from the US), it’s generally accepted that Canadian exporters enjoy a net benefit as the loonie loses ground against its American counterpart.