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Falling Dollar Good Timing for Australia's Grain Growers

21 January 2014

AUSTRALIA - A weakening Australian dollar is boosting returns for Australian grain producers.

ABC Rural reports the Australian dollar fell to a three-and-a-half year low against the US currency on Monday, trading at just below 88 US cents.

Nathan Cattle, a grains analyst with Profarmer Australia, says every one cent depreciation in the dollar is worth as much A$3 a tonne in wheat prices.

He says the lower dollar has come at a good time for Australian growers, who have just come off a bumper harvest.

"Right now, we've got Australian exporters actively engaged in the international market place trying to sell and move Australian grain, so given international markets operate in US dollars a tonne, the timing has been fantastic," Mr Cattle said.

An Australian dollar trading around 88 US cents represents a vast improvement for grain producers, compared to the 105 US cents it reached around the same time last year.

"The windfall for growers has been in the order of 30 to 35 bucks a tonne, just in the movement of the Aussie dollar, " Mr Cattle said.

"We had some really good prices on offer back at the start of 2013. The international values have come off significantly in US dollars a tonne. Thankfully that Aussie dollar dropping since the start of 2013 has buffered our prices in the order of 30 to 35 bucks a tonne.

"It's a good news story for growers."

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) is forecasting the Australian dollar will average around 92 US cents for the current financial year, significantly lower than the 102 US cents average in the 2012-2013 financial year.

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