Donald Trump’s decisive victory in the U.S. presidential election sets the stage for significant moves in grain and oilseed markets over the next four years.
Tariffs: A trade war with China roiled the U.S. soy market during Trump’s first term, and a repeat is likely in his next administration, given campaign promises of stiff tariffs on Chinese imports.
Some traders believe Trump’s victory may increase demand for U.S. corn and soybeans ahead of his January inauguration. Others may be taking a step back due to the longer-term uncertainty.
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Canola price outlook rather grim for Canadian farmers
Nearby canola futures slipped further back during the week ended Sept. 4, as they approached C$600 per tonne. The most-traded November contract lost C$15.50 on the week, that brought it down to C$620.20/tonne.
Chicago soybeans traded in the US$9 per bushel area during the height of the trade war, with U.S. soybean sales to China down sharply and stocks high as more Chinese buying shifted to Brazil. Billions of dollars in subsidies were handed out to U.S. farmers, lessening the blow to producers, but long-term damage was done to U.S. exports and South America emerged as the victor.
China grew more comfortable with sourcing supplies from Brazil and Argentina and both countries increased their available production in the past few years.
Trade: Any weakness in U.S. markets will also weigh on Canadian commodities such as canola, but Canada could also face a more direct challenge. Trump’s last term saw the end of the North American Free Trade Agreement and its replacement with a new trade deal between Canada, the U.S. and Mexico. What’s to come this time around given some of Trump’s protectionist rhetoric?
Canadian canola oil shipments to the U.S. could be something to watch, especially given that a Trump administration is expected to adjust environmental policy.
Geopolitics: Wars in Ukraine and the Middle East have had a sizeable influence on grain and energy markets. Crude oil and wheat markets could look quite different a few months from now.
