THE slide in the Australian dollar's value from about US94 cents to US87c in two months might be welcomed by some, but our low currency isn't delivering the upside returns it once brought our farm commodities.
Agricultural exports are less sensitive to exchange rate movements, with traders and analysts saying longer periods at low values are now needed to bring any great benefit.
"There seems to be a bit of a disconnect compared with 10 years ago or so when the market was highly sensitive," said Australian Wool Exchange market information manager Lionel Plunkett.
"You'd get daily movements in the dollar and you'd see that reflected almost straight away in the wool market."
He said the change was partly because of shifting buyer dynamics in the wool market, which now sent most purchases to China, resulting in more hand-to-mouth buying and less currency covering.
The softer dollar certainly had not helped wool values in the past six months, with 19-micron wool trading at about 100 cents a kilogram below a year ago (about 1160c/kg) and 21-micron wool trading at about on par (about 1120c/kg).
Grain markets have taken a hit as the dollar dropped, largely because of the strengthening US economy.
Market strategist Malcolm Bartholomaeus said the Aussie's fall was largely because of a rally in the US dollar.
That in turn pushed down US grain futures prices, so the two tended to cancel each other out.
Beyond that, there was a further fall in wheat futures based on the supply fundamentals in the current global market, said Mr Bartholomaeus of Bartholomaeus Consulting.
"While we might have seen a six cent drop in the (Australian) dollar in the past few weeks, we've actually seen the value of US futures fall by $30 a tonne," he said.
"We've seen a similar sort of price fall in the forward prices in Newcastle port zone, the Port Kembla zone and the Melbourne zone.
"Ever since the dollar was floated in 1983 we've tended to have our best wheat prices when our dollar has been high and our worst wheat prices when it's low.
"When the exchange rate is low against the US currency, a high US dollar puts downward pressure on commodity prices expressed in US dollars.
"The biggest benefit the market has seen lately is that Australian prices have not fallen as fast as the US wheat values."
Local graingrowers were not hit as hard by the declining market, but it had still dragged prices down.
Last month, US wheat prices fell 17 per cent while US futures values in Australian dollar terms were down 11.6pc and cash prices in NSW and Victoria fell about 9pc.
Benefits to beef returns were also minimal at this point said Meat and Livestock Australia (MLA) market information manager Brett Thomas.
"The big challenge for the beef industry at the moment is just how high slaughter rates have been, with cattle numbers going to abattoirs (indicative eastern States kill) still at 170,000 head, which is historically very high," he said.
Dairy returns are also likely to take some time to flow through to export contracts, depending on how far ahead exporters have locked in their current sales deals.
In fact, a lower dollar may only end up providing a slight buffer against already falling global milk commodity market values, with whole milk powder auction prices down 45pc since January.
"There's been a lot happening in the world market - Russian sanctions, an unanticipated Chinese stockpile - markets are a bit uncertain," said Dairy Australia's trade and industry strategy manager Charles McElhone.
"Having said that, new season prices offered by the processors are still pretty high, and could still improve further if the dollar stays low and market trends reverse."
Meanwhile, for food and agricultural product importers the Comm- onwealth Bank assesses the "average point of pain" at US84c - not far from current levels of the Australian/US dollar.
"For exporters, there is finally some relief because the point of pain of US93c is well above current levels," a spokesman said
The Reserve Bank of Australia and Treasury would like to see the dollar lose as much as 8pc more to reach levels that would help the economy weather falling commodity prices and further falls could be likely with China's economy weakening, New Zealand's dollar having slumped, and iron ore prices down 40pc this year.
ANZ senior foreign exchange strategist Daniel Been said the bank had forecast the dollar's downturn for some time.
ANZ was looking at US88c for the end of the year and US85c by the first quarter of 2015.
"The timing and pace of the latest decline was surprising given the seeming lack of triggers" he said.
"It will probably drop further but in the near term it could stabilise a bit as we can catch our breath."
Meanwhile, the NAB Rural Commodities Index fell for the fourth straight month in August, down 3pc for the month, and 4.4pc in US dollar terms.
The falls were led by lower lamb, dairy, cotton wheat and sugar prices, which in turn contribute to lower export terms of trade.
- ANDREW NORRIS, ROBYN AINSWORTH and ANDREW MARSHALL
