Donald Trump's election victory brings with it a great deal of agriculture trade uncertainty, as the president-elect has promised to expand on aggressive tariffs implemented during his first term.
On the campaign trail Trump proposed tariffs of up to 20pc on all foreign goods and 60pc tariffs on all imports from China. Reigniting trade tensions with China is a primary concern for US agriculture markets, particularly for US soybean exports as China is the largest purchaser of US soybeans.
Market sentiment is not yet clear on the immediate impact of the election results. Some participants believe Trump's victory may increase the rate of US corn and soybean purchases ahead of Trump taking office in January, while others think buyers may take a step back and wait for prices to settle after the election. Some US buyers are also avoiding long term contracts to import soybean products due to the risk of future tariffs.
Argus assessed fob US Gulf prices for corn and soy rose slightly on 6 November. Fob US Gulf corn rose by $2.27/t for both December and January, and by $1.97/t for February, to $211.52/t, $205.22/t, and $208.66/t respectively. Soybeans gained even less, with December up $0.73/t, January up $0.74/t, and February flat, totaling $411.62/t, $411.44/t, and $411.44/t respectively.
The minimal gains in fob US Gulf prices indicate a mixture of indifferent and uncertain sentiments as to the expected policy changes under a new US administration.
China's current marketing year purchase commitments for US soybeans total 11.13mn t, down about 7pc from the previous year's 12.02mn t. Chinese purchases of 2024-25 crop soybeans from the US were behind pace earlier in the year, partially due to concerns about the election and US trade policy. China made its first purchase of 2024-25 crop soybeans in July, but purchased US new crop soybeans as early as January during the 2023-24 marketing year.
China's purchases of US corn have also been slower than the previous year, at currently at 20,000t, down by nearly 98pc from the year prior level of 910,000t.
LatAm opportunity
Latin American countries may benefit from Trump's election, as the potential for hampered US exports to China would open leave an opening for Latin American imports. In the previous trade war, China placed retaliatory tariffs on the US and in return purchased less US soybeans, filling the gap primarily with Brazilian product.
Though China does not purchase as much US corn compared to soybeans, the potential for another trade war could leave a small gap for corn exports to China that Latin America could fill. In May, China approved two varieties of genetically modified (GM) corn for import that are grown in Argentina, allowing the country to export corn more easily to China. Market participants in Argentina believe there may be an opportunity to increase exports if China limits US purchases.
This year, much of Brazil's corn has been sold domestically as demand has increased in Matto Grosso, but the country may also be of benefit from the US election if Chinese demand increases.
US agriculture inputs at risk
Trump has also made promises to appoint Robert F Kennedy Jr to his administration, who has been outspoken against pesticide-intensive agriculture. Kennedy's views run counter to many of the polices enacted under Trump's first term, which included rolling back pesticide regulations. Notably, the EPA rejected a proposed ban of chlorpyrifos that are used in pesticides, which were later banned by the administration of President Joe Biden.
Trump has not yet defined Kennedy's role in his administration, but market participants are concerned he could place restrictions on chemical inputs that help improve US crop yields.
The US Department of Agriculture forecast US corn yields for the 2024-25 crop at 183.8 bu/acre and 53.1 bu/acre on 11 October, two new records that are partly due to chemical inputs utilized by most American farmers.
