Strong is good and weak is bad, at least when it comes to the U.S. dollar, or so we have been told. But while a strong dollar value has long been linked to a strong U.S. economy, not everything that glitters (pardon the pun) is gold.

While a strong U.S. dollar seems to be a good thing for the American consumer, it may prove to be more costly over time, resulting in elevated prices for such things as food. That's not to say a weak dollar is a good thing either. There are good and bad selling points for both.

Let's talk about food.

When a farmer or rancher produces a food product, whether a crop or in the form of beef or pork or chicken, he has the option, in fact an economic mandate, to sell much of his product for local consumption, and also to move much of it to foreign buyers. For one thing, it strengthens the marketing ability of the U.S. producer to be profitable, a.k.a., the art of staying in business.

It also helps to feed a hungry world.

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According to USDA's latest World Agricultural Supply and Demand Estimate (WASDE) report, U.S. agricultural exports represent a substantial chunk of most food crops and meat product production. Nearly 13 percent of all corn produced in the U.S. is exported, more than 48 percent of soybeans are destined for foreign markets and nearly 44 percent of wheat is purchased by foreign buyers.

Richard Widmar is a Kansas farmer and agricultural economist and researcher for Purdue University. Focusing on agribusiness, his role is to facilitate the flagship research projects of Purdue’s Center for Food and Agricultural Business. He says that as the U.S. dollar gains strength against foreign currencies, a natural drawback, a Catch 22, occurs for U.S. producers.

While a stronger dollar may help stabilize prices for certain farm or ranch supply items, for example, it also has a negative impact on exports. Specifically, as the dollar value increases, so does the price of the crop to the foreign-based buyer.

"Say a grain buyer in Mexico wants to buy U.S. corn. He would need to price the corn (in U.S. dollars), arrange transportation, mind all trade regulations and fees, and then consider the exchange rate. The exchange rate is how much it would cost the Mexican grain buyer to purchase the U.S. dollars he needs to buy the corn. This gets tricky; not only are they buying corn, but they are also buying U.S. dollars."

In other words, as the dollar strengthens against the peso (in this case), the more pesos the buyer must spend to acquire the corn.

Commodity trading

"Like the commodities, currencies are traded on exchange markets. The prices change based on global supply and demand of various currencies.  Just as some commodities rise while others fall, currencies do the same," Widmar says.

According to the Federal Reserve Bank of St. Louis, a trend line shows that since 1970, the U.S. dollar has weakened, or become cheaper, relative to other major currencies. But in recent times that has changed and the dollar has been gaining strength in relation to foreign currencies.

"In general, if you want to buy something abroad, a weak U.S. dollar is bad – you have to spend more U.S. dollars to buy the other currency to then make your purchase. Conversely, if you want to sell something abroad, a weak U.S. dollar is helpful – your buyer needs less of their local currency to buy the U.S. dollars needed for your goods or service," he adds. "With the exception of a couple of run-ups in the mid-1980s and early 2000s, the dollar has been trending weaker. More recently, since 2011, the U.S. dollar has begun to climb out of its more than 40-year low."

Widmar and fellow agricultural economist Brent Gloy have teamed up to conduct research and to publish a popular blog site, "Agricultural Economic Insights, Perspectives of Two Agricultural Economists." Gloy is the founder and served as the first Director of Purdue’s Center for Commercial Agriculture.

"To look at how the dollar affects the price of U.S. grain exports, we calculated the relative cost of corn in different countries over time. We took the monthly USDA-NASS average cash price for corn, wheat, and soybeans in the U.S. and converted it to the local currencies for Japan, Mexico, and China. The data are monthly and span from January 2010 to December 2015," Widmar said about their latest research.

The results indicated a major relationship in the price of corn and other grains to currency values in both the origin and destination points of U.S. exports. As the dollar strengthened and the Japanese yen weakened, the price of U.S. corn and other grain fluctuated, in this case raising the price for the Japanese buyer.

In 2014, with the lower prices in corn and grain products, you might think the cost of imports has declined, and indeed they have. But the level of that decline has been greatly offset by the stronger dollar compared to both the yen and the peso, for example. So while U.S. producers are feeling the squeeze over lower prices for their grain, many foreign buyers, if not most, are not realizing the full savings of that price decline because of the cost of paying for exports in U. S. dollars, or based upon currency rates for the dollar in their respective countries.

For wheat produced in the U.S. for export, the cost has actually gone up for foreign buyers in 2014 even though the price of wheat remained about the same for January as it was in December. A stronger dollar is why.

"As the U.S. dollar has strengthened, it has made U.S. grain relatively more expensive.

In short, the dollar has been strengthening and will create pressure on the grain markets as a more costly U.S. dollar makes U.S. commodities also more costly," according to Widmar's latest blog post.