Futures contracts soy, corn and wheat The United States suffered a sharp drop in overnight trading following Donald Trump’s re-election as US President. With over 270 electoral votes, Trump defeated incumbent Vice President Kamala Harris. As expected, he announced plans to implement strict tariffs on imported goods. Consequently, the move raised fears of a possible trade war. The former president also proposed a 10% tariff on all imported goods, along with an additional 60% tariff on Chinese imports, aimed at stimulating domestic manufacturing production.
China, the world’s largest importer of soybeans, is a major source of concern. The country already has tariffs on U.S. goods, but still offers exemptions for some specific items. If these exemptions are removed and Trump’s new tariffs are implemented, soybean exports to China could fall by as much as 52%, resulting in an annual reduction of 14 to 16 million metric tons. For corn, Chinese imports could fall by around 84%, equivalent to about 2.2 million metric tons annually.
Tariff uncertainties affect agricultural futures contracts
Experts from the National Corn Growers Association and the American Soybean Association noted in a report released on October 15 that soybeans and corn are a major contributor to U.S. agricultural exports. They account for about a quarter of the sector’s exports, making them significant targets for any new tariff measures. China already imposes tariffs on U.S. products, but an expansion of those tariffs would directly affect the country’s agricultural exports.
Given this scenario of uncertainty, soybean futures for January, for example, fell 17 1/2 cents, with the price reaching US$ 9.84 1/4 per bushel. In addition, soybean meal registered a significant drop, plummeting US$ 5.70 to US$ 293.80 per short ton. On the other hand, soybean oil showed a slight increase, rising 0.17 cents to US$ 45.16 per pound.
Meanwhile, corn futures fell 2 cents to close at $4.16 1/2 a bushel. Likewise, December wheat futures fell 8 cents to close at $5.64 1/2 a bushel. Finally, Kansas City futures also fell 8 1/2 cents to close at $5.68 1/4 a bushel.
Source: Leonardo Gottems | agrolink
