SOUTH-WEST dairy farmers are set to gain from the falling Australian dollar which is helping processors maintain farmgate milk prices to counter a slump in world commodity prices.
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The effect on export returns equates to about six cents per kilogram milk solids for every cent fall in the dollar.
This week the dollar exchange rate fell to 81 cents compared with 94 US cents in July. Analysts are tipping a fall into the 70 cents range before the end of the year.
Falls this week have been influenced by the Russian economic crisis, sparked by the tumbling oil price.
Warrnambool Cheese and Butter chief executive David Lord said the falling dollar was helping the company maintain its farmgate price despite very low commodity prices.
“The fall over the past six months has been very significant and has been very helpful,” Mr Lord said.
“We’ve had price slumps before when the dollar has also been high. At least we’re getting some relief from the dollar this time.”
ANZ foreign exchange strategist Daniel Been said while the Russian situation had no specific effect on the Australian dollar it was making investors nervous about investing in commodity-based economies.
“Oil prices flow through to commodity prices generally and that makes investors nervous about investing in economies that are heavily exposed to commodity prices,” Mr Been said.
