<p>Most global commodities are quoted (priced) in US dollars. The more valuable a dollar becomes relative to other currencies, all other things equal, the more commodity prices have to fall to equilibrate. Imagine everything was priced in corn and people start to value corn more or the amount of corn falls. Either way, all the prices in terms of corn (e.g. ears per barrel of oil) would have to fall as a result. </p>

CC BY-SA 3.0
2015-05-06T10:36:14.600Z
2015-05-06T12:52:27.230Z
2015-05-06T12:52:27.230Z
BKay
<p>What happens if the demand for something falls? </p>

<p>The price falls. </p>

<p>So, you have two different effects. 1) An increased dollar value and 2) A decreased demand. The dominating effect will tell you about the overall price movement. </p>

CC BY-SA 3.0
2015-05-06T14:44:12.370Z
Do you actually have a decrease in demand though? When the price of something increases, the amount demanded at that quantity will be lower. But demand itself hasn't decreased.
Nox
CC BY-SA 3.0
2015-05-06T08:10:31.633Z
2015-05-06T08:10:31.633Z
Thorst
<p>Many commodities are prices in US dollars. If the Dollar strengthens, then commodities (in non-US countries) will become more expensive. From the consumers' (suppliers') point of view, this should be a move along the demand (supply) curve, not a shift since nothing has inherently changed in their demand or supply of the actual commodity. For a stronger dollar, a consumer will simply demand less. </p>

<p>Then why is it that a strong US dollars is highly correlated with low commodity prices? Is the efficient market adjusting to pre- strong dollar levels? </p>

CC BY-SA 3.0
2015-05-06T11:14:27.547Z
Low prices in what currency?
Giskard
CC BY-SA 3.0
2015-05-06T14:40:30.110Z
@denesp low prices in US Dollars.
Nox
<currency><supply-and-demand><commodities><agriculture>
Effect of Strengthening US Dollar on Commodities
Nox
# Effect of Strengthening US Dollar on Commodities

(Asked by: username_0 on 2015-05-05)

Many commodities are prices in US dollars. If the Dollar strengthens, then commodities (in non-US countries) will become more expensive. From the consumers' (suppliers') point of view, this should be a move along the demand (supply) curve, not a shift since nothing has inherently changed in their demand or supply of the actual commodity. For a stronger dollar, a consumer will simply demand less.

Then why is it that a strong US dollars is highly correlated with low commodity prices? Is the efficient market adjusting to pre- strong dollar levels?

**Tags:** currency, supply-and-demand, commodities, agriculture

> **Comments:**
> **username_1**: Low prices in what currency?  
> **username_0**: @denesp low prices in US Dollars.  

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## 2 answers

### Answer by username_2 on 2015-05-06. Score: 3

Most global commodities are quoted (priced) in US dollars. The more valuable a dollar becomes relative to other currencies, all other things equal, the more commodity prices have to fall to equilibrate. Imagine everything was priced in corn and people start to value corn more or the amount of corn falls. Either way, all the prices in terms of corn (e.g. ears per barrel of oil) would have to fall as a result.


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### Answer by username_3 on 2015-05-06. Score: 1

What happens if the demand for something falls?

The price falls.

So, you have two different effects. 1) An increased dollar value and 2) A decreased demand. The dominating effect will tell you about the overall price movement.

> **Comments:**
> **username_0**: Do you actually have a decrease in demand though? When the price of something increases, the amount demanded at that quantity will be lower. But demand itself hasn't decreased.  

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