Thursday, October 15, 2009
(click on image to enlarge)
Dairy imports are heavily dependent upon relative currency value of the nation of the nation we are trading with. A strong U.S. dollar actually is a means of putting Americans out of work or off the farm.
All of the early formulators of capitalism never had a thought about currency, most trade was bartered trade from the very beginning of trade.
Now, however, currency values play an ever increasing role in trade. The big players hedge by trading currency futures. Most of the imports of dairy products here in the U.S. come from New Zealand.
Currency futures are traded at the Chicago Mercantile Exchange. For a look at the “thinnest” of futures, the Commodity Futures Trading Commission publishes the “Commitment of Traders” report. Above is a look at a recent report for the N.Z/U.S. dollar.
Talk about a thin market!