Are Pulses Winning the Argument?

VANCOUVER - Oct 20/07 - SNS -- Underlying market sentiment for most pulses remains bullish even as peak demand for the fall shipping period starts to wind down. While growers share the market's enthusiasm, they are becoming deeply concerned with the impact the Canadian dollar will have on prices they receive.

Many currency analysts are looking for the dollar to peak somewhere between 107 and 110 cents versus the U.S. dollar. Deferred delivery months in currency futures markets reveals no disagreement with the trend, with deferred delivery options holding a modest premium to the nearby. Some analysts say that if history is a guide, the Canadian dollar will likely remain at par or better for the next five to seven years.

There is no lack of support for anyone's hoped for exchange rate. The Conference Board of Canada's deputy chief economist recently said while it is officially predicting the dollar will drop back to 93 cents within three years, there is nothing stopping the dollar from doing the opposite. He says if there are lower interest rates in the United States and steady rates in Canada, the dollar could trade between $1.05 and $1.10 by 2011.

A strong Canadian dollar is having a mixed impact on western Canadian specialty crop producers. Where Canada is a the dominant exporter, it is having no impact on grower returns, but where Canada is more of a price follower, it is directly affecting grower bid prospects.

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