Canadian Farmers Advised to Watch Interest Rates and Value of Canada’s Dollar

Farm Credit Canada is advising Canadian farmers to be aware of the value of the Canadian dollar and to keep on top of interest rates

by Bruce Cochrane – FarmScape Online

Farm Credit Canada’s mid-year economic outlook for Canada’s hog and pork sectors, released last month, indicates higher slaughter hog inventories will pressure profitability but continued strong demand for pork remains a positive factor.

Craig Klemmer, a Principle Agricultural Economist with Farm Credit Canada, says, while the Canadian dollar is expected to remain stable, interest rates can be expected to move higher.

“It’s important to be paying attention to developments in trade”

“Interest rates have been increasing and with the continued growth and strong economy and labor market that we have in Canada, it’s expected that interest rates are going to continue to move higher over the next little while.

“Market expectations are for interest rates to be increasing at least one more time in the current year, and likely continue into next year as the Canadian economy continues to remain strong and growing.

“That’s going to mean higher interest costs for producers and that’s going to be something to be monitoring.

“The Canadian dollar is also impacted by interest rates but we are looking at the dollar to remain below that 80 cent mark. Somewhere in the 77, 76 range for the next little while would be ideal as we continue to see strong growth in the U.S. economy. As a result, that lower Canadian dollar is supportive of Canadian pork exports into international markets well into 2019.”

Klemmer says it’s important to be paying attention to developments in trade and to see opportunities for exports.

He says strong international demand will continue for Canadian exports but it’s important we remain agile in terms of getting our products to the markets that are available and to continue to add value to those products.

Farmscape is a presentation of Sask Pork and Manitoba Pork