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Exchange Rate Becoming Issue by Washington Wheat Commission WHEAT LIFE, March 2002

The continued strength of the U.S. dollar and its detrimental effect on exports is finally receiving attention. The American Farm Bureau Association is urging the administration to end its strong dollar policy. Likewise, the National Association of Manufacturers recently said the U.S. dollar is around 30 percent overvalued against other currencies in trade-weighted terms. With a continued weakening of the Canadian dollar, the Canadian Wheat Board recently increased its Pool Return Outlook agaiin, raising its estimate of crop year returns to growers. Essentially, as the U.S. dollar strengthens, the CWB obtains more Canadian dollars in exchange for wheat sold basis the U.S. dollar, thus more Canadian dollars are available for growers.

Exchange rate risk appears to be on the minds of buyers in Egypt and is a major reason the USDA's GSM credit guarantee program is struggling.