Unless you’ve been living a life of total seclusion, you likely know our Canadian dollar has fallen drastically over the last couple of years.  It is certainly painful if you’re lucky enough to have a southern vacation planned and need to visit your financial institution to purchase American greenbacks.

However, in the agriculture sector a lower Canadian dollar can be regarded as a blessing.  Yes, there’s definitely increased pricing on equipment that is manufactured in the U.S. and crop inputs have risen slightly due to the lower dollar.   What doesn’t often get acknowledged is the gain in the crop basis levels attributable to the lower dollar.   In 2013 when the Canadian dollar was near par with the U.S. dollar, the corn basis level was around $0.50 under CBOT corn price.   Today that basis level is close to $1.00/bu over CBOT.  Soybeans have the same story, with 2013 basis levels at $0.75/bu below Chicago, where today it’s $1.50/bu over Chicago.

On a 160 bu/ac corn crop this amounts to around $240/ac more revenue, and a 50 bu/ac soybean crop brings in another $112.50/ac.   To confirm how the basis is propping up our commodity prices, one only has to look a few miles over the border into Michigan where new crop corn bids are around $3.25/bu and new crops soybeans are at $8.05/bu.

Maybe things aren’t all that bad with our low dollar afterall!   And sure, go ahead and take that trip south with the family, you deserve a holiday and we only live once!

– Ken