Friday’s Insider: Strong US dollar — winners and losers

The 2016 election of Donald Trump was a game-changer for global markets. Promising tax cuts, deregulation, and a surge in infrastructure investment created high expectations for economic growth. The result? A sharp rise in the value of the US dollar.

By early 2017, the Dollar Index (DXY) hit a 14-year high, fueled by optimism over Trump’s pro-growth agenda and expectations of higher interest rates. In the following years, trade war uncertainties, fiscal concerns, and Federal Reserve rate tweaks led to slight corrections, but the dollar remained strong overall.

If we assume 2025 will bring us a similar scenario (and EUR/USD is 1.055 today), who will be the potential winners and losers of this further USD strengthening? Among the winners, I see US fertilizer producers (e.g., CF Industries) with their cheap access to natural gas—a key input for nitrogen fertilizers—helping them stay competitive despite the strong USD. Domestic demand from farmers may buffer the impact of reduced export appeal. Also, exporters from USD-pegged economies (Middle East). Producers of urea and ammonia in USD-pegged countries will enjoy stable contracts and continued strong demand, leveraging their cost advantages.

Emerging market importers will suffer. A strong USD drives up import costs for fertilizer-reliant nations in Africa, South Asia, and Latin America, leading to reduced fertilizer application and pressure on crop yields. Don’t forget about the European producers (e.g., Yara). European fertilizer companies struggle to compete globally, as the strong dollar makes US, Middle Eastern, and—don’t be surprised—Russian products more attractive to buyers.

Let’s have a quick glance at agricultural commodities. In the US, domestic demand for grains like corn and soybeans will surge initially, giving US producers an edge in the local market. Exporters from countries like Brazil and Argentina will benefit from increased demand as their currencies remain weaker than the USD, making their crops more affordable globally. In the long term, US agricultural exporters will lose. The strong USD will eventually price US commodities like wheat and corn from the global market, ceding market share to other producers.

Farmers in emerging markets will sacrifice as well, as higher USD-denominated input costs (fertilizers, seeds, and machinery) put a financial strain on farmers in developing regions, often reducing planting activity—food importers. For example, nations reliant on staple crop imports, such as Egypt, may face surging costs, exacerbating food security challenges. Again, in Trump’s first term, geopolitics was like a double-edged sword. China’s tariffs on US soybeans during Trump’s tenure crippled American exports, creating oversupply and depressed prices in domestic markets. At the same time, soybean demand shifted to South America, allowing Brazil and Argentina to capitalize on reduced US competitiveness.

As we look ahead, with Trump potentially re-entering the global stage, we may see a repeat of these dynamics. A strong USD, coupled with geopolitical volatility, could reshape the landscape for fertilizers and agricultural commodities once again.

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About the Author of “Friday’s Insider”: Ilya Motorygin is the co-founder of GG-Trading and brings 30 years of experience to the fertilizer industry. Renowned for his comprehensive problem-solving skills, Ilya expertly manages deals from inception to completion, overseeing aspects such as financing, supply chains, and logistics.