Navigating Currency and Grain Market Insights with Michael Buck

In the ever-evolving world of grain trading, few factors influence profitability as significantly as currency movements. To shed light on this dynamic, we spoke with Michael Buck, Head of Structured Products at CBH, who brings a wealth of experience from trading roles and a technology background in Perth, London and New York. 

How Currency Shapes Grain Prices 

The value of the Australian dollar (AUD) directly impacts grower returns. “The weaker the AUD, the higher the price the grower will receive,” Michael explains. He recalls when the AUD reached 1.1000 against the USD—making Australian grain almost unsellable. By contrast, this past season saw the AUD swing between 0.5915 and 0.6940, driving a $62 per tonne shift in wheat prices. 

Competitiveness on the Global Stage

 With rising production costs, favourable exchange rates are vital for Australian growers to compete internationally. Michael notes, “The market isn’t always connected, but currency can be the connector—more tonnes are traded when the exchange rate is favourable.” For example, sharp AUD drops can unlock export opportunities, offsetting local cost pressures. 

One such moment came in April, when US tariffs sparked a global market crash. The AUD plunged to 0.5915, rattling trade flows before rebounding and trending upwards again. 

Key Currencies to Watch 

For grain exporters, monitoring currency trends is essential. Michael highlights several key currencies: 

• USD – Benchmark for global grain trade. 
• Euro – Influences lupin and canola trade. 
• JPY (Japanese Yen) – Key export destination. 
• CAD (Canadian Dollar) – Important for GM canola. 

Which Commodities Feel It Most? 

All grains respond to currency shifts, but high-value crops like canola are especially sensitive. Even small currency moves can significantly alter per-tonne returns, making hedging strategies critical. 

Managing Currency Risk 

To mitigate risk, most traders base their positions in USD, aligning with how grain is ultimately sold. “They typically use a Forward Exchange Contract (FEC) to match their cashflows,” Michael explains, ensuring stability despite market volatility. 

Drivers of Change 

Currency movements are shaped by central banks and geopolitics. Interest rate differentials from the RBA and the US Federal Reserve are major factors, but Michael points out that global events—like this year’s US tariffs—have become equally disruptive. 

Looking Ahead 

Michael sums it up with an analogy: “The Aussie dollar goes steady up the elevator and slides down the elevator shaft.” As a risk currency, the AUD is highly sensitive to global shocks. While forecasts suggest a slow climb higher over the next 6–12 months on the back of a weakening USD, volatility will remain. 

Want to get your grain on MarketPlace for this harvest? Let us get you set up before harvest kicks off - so you don't miss your target prices. Call Lauren on 9416 6244 or email info@dailygrain.com.au