Price Report: A Stronger U.S. Dollar

Putting political affiliations aside, the U.S. dollar is stronger than it has been in a decade. Whether that’s due to a better economy at home or a volatile global economy is for candidates to debate. Regardless of the reason, a stronger dollar means big things in the economic climate both at home and abroad.

A strong dollar simply means that the bills in your wallet have more value when compared to another currency than they did before. If you fly to France and stand in line at the currency exchange at the airport, the man on the other side of the glass will give you more euros for your $100 bill than he did five years ago.

So traveling abroad is cheaper than it was before. You can buy more euro-priced goods for the same number of U.S. dollars. But keep in mind that the dollar is still not equal to the euro, so the coffee that costs you one euro is still costing you a little more than one dollar.

This implication translates into imports and exports in the United States. As the dollar strengthens, imports typically rise because we can buy more things for the same price.

At the same time, exports tend to decrease for the opposite reason. A company in Belgium or China must pay more for the exported American goods, so they are likely to buy fewer things from the United States.

American companies that rely on exports have felt a pinch. Tiffany & Co., a luxury jeweler based in New York City, reported profits down six percent during the holiday season, primarily due to weak tourist spending and decreases in Europe, the Americas and in the Asia-Pacific region.

If you consider foreigners visiting Door County and spending money on goods and services an export, we can expect to see fewer foreign tourists in the county this summer because it’s more expensive for them to travel in American dollars.

In local industry, we can expect exports on items such as cheese and grains to decline, perhaps putting a strain on those who rely on foreign exports.

The growth of the dollar is expected to continue as the Federal Reserve continues raising interest rates in 2016. At a time when European countries are contracting their interest rates, this could mean compounding changes to the strength of the U.S. dollar.

Crop prices (Jan. 19)

Rio Creek Feed Mill – Algoma

Fox River Valley Ethanol – Green Bay

Basis: The difference between the local cash price for a commodity and the Chicago cash price (where the Board of Trade sets national futures price).

Gas Price Averages

United States: $1.88

United States one year ago: $2.06

Wisconsin: $1.77

Wisconsin one year ago: $1.95

Northern Door: $1.86

Sturgeon Bay: $1.78

Other Commodities

Gold: $1,084.90/troy ounce

Silver: $14.04/troy ounce

Oil: $28.94/barrel

Live Cattle: $1.29/pound

Lean Hogs: $0.68/pound

Sources: aaa.com, agweb.com, gasbuddy.com, cnn.money