Forex and oil price movements are keeping fresh produce traders on their toes.
The ailing dollar finally showed a little strength rising one per cent against the euro, as the Journal went to press.
More encouragingly, oil prices had slid to a three-month low, prompting speculation that freight prices might start to ease off.
The dollar was trading 1.3 per cent up at $1.9317 against sterling; $1.3325 versus the euro and rose a percentage point against the yen also on Wednesday.
But the dollar’s position is still weak, and the picture is more complex for exporters. “The dollar is weak against sterling and the euro so when Chileans sell in the UK and Europe they get a lot of dollars for their money,” said Alan Guindi of importer Richard Hochfeld. “But it is not just our currencies that are strong against the dollar: the Chilean peso is strong too so when they convert back in order to pay local costs such as labour and agrochemicals, they do not get a lot of pesos for their dollar.”
Freight costs are paid in dollars so these are not affected by the strength of the peso or European currencies, but these charges are still expensive. “Freight charges have increased by six per cent year-on-year,” said Guindi.
But crude oil prices have fallen to their lowest levels in three months and are down by 27 per cent on all-time highs recorded in October. Oil-price cartel, Opec, is due to meet on Friday and faces producer-pressure to come down hard on excess output.
The declining price has not had any knock-on effect yet on freight rates but if mild winter weather in the northern hemisphere so far keeps oil prices low, the effects may be felt in freight.
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