Trump Wins - Do Farmers Lose?

The Commodity Report #180

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Trump Wins - Do Farmers Lose?

Trump won another presidency. In a landslide win, the Republicans secured even both houses - the White House and the Senate. I won’t go in details about what that result means for my beloved Americans and whether it’s good or bad. Instead, let’s look at the facts:

So far the “Trump Trades” worked which are Long Crypto, Long Stocks, Long USD as well as Short Bonds and Short Commodities. I personally don’t like election volatility in commodity markets. Therefore I don’t change my opinion on the markets two days before and two days after the actual event. In Germany we have the saying “political markets have short legs” which can be translated as politically driven price fluctuations are most of the time short-lived and overdramatized.

Adding to that - I must say that commodities were the most indecisive under all these Trump Trades with many commodities trading sideways but with large volatility highlighting the uncertainty of the renewed Trump impact on energy, metals but also agris.

Talking about agris: Soybean sales to China dropped by almost 79% in the first two years of Trump’s first presidency - due to tariffs.

Trump has proposed a 10% to 20% tariff across the board on all imported goods into the US, and a 60% tariff on Chinese products — a move that could prompt retaliation from the world’s largest soybean buyer.

On that note also see my post from August titled “Is China Piling Up Commodities for War or for Trump?” from which the following graphic is as well.

Reacting to Donald Trump’s victory overnight, Francisco Blanch, Bank of America’s head of commodities research, said: “America first means commodities second'“ in a comment to the Financial Times.

“They will be facing a higher dollar. Higher tariffs are probably the last thing the markets need when economies [and] commodities are so weak. Tariffs will mean less demand, a knockdown effect on economic growth. Along with the stronger dollar, this is not a great cocktail for commodities generally.”

UBS meanwhile views the Republican victory as a short-term bearish factor for metals. “The republican win is a negative for industrial metals near-term due to the risk that a trade war will weigh on global trade & industrial production impacting real demand, and as commodity prices are indirectly impacted by a stronger USD & higher real rates”, the investment bank wrote during the week.

They also shared two interesting graphs regarding the promised tariffs, Trump spoke about. Whether or not these tariffs really come in place, I think it’s safe to say that Trump will be more aggressive towards China than during his last term.

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In Other News…

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This week, look out for the following:

• CPI data on Wednesday (watch out for hotter numbers as financial conditions remain very loose)

• Empire State Manufacturing Index and Retail Sales data on Friday

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Research Service

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Till next Monday, Lukas

If you have any questions in the meantime, please feel free to contact me via X or Mail.

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