TRUMP, TRADE AND ETHANOL.

Over the years, I’ve fielded many questions from people asking me about the ramifications with a new president.

The latest, of course, is, “What does the Trump administration look like, and how might it affect agriculture?” My general response is usually something along the lines of, “It’s hard to outguess what politicians are going to do.” Therefore, the key, as with anything, is to be prepared for most anything.

As we look ahead, however, our best guess suggests change is at hand. Whether this change is positive or negative for agriculture, only time will tell. One of the bigger concerns is how potential change affects the U.S.’ largest agriculture trade partners: China, Mexico, and Canada. Will new relationships with these countries be greatly changed in the future? Again, only time will tell. However, in the very near-term, we doubt there will be significant (if even minor) changes.

Ethanol is a big topic. Yet, ethanol is a viable and necessary industry for the same reasons it was more than 10 years ago. It helps to curb dependency on foreign oil, in addition to providing support to the agricultural community and broad-based employment.

We doubt there will be any significant changes in the near-term. Energy prices are on the rise, and farmer incomes on the decline.

As far as other concerns, President-elect Trump has seemed to voice additional concerns with China and, of course, Mexico. Yet, from a buyer’s perspective, China has a ravenous appetite for protein products.

With a growing middle class and need for feed, we don’t see any change in China’s purchasing of soybean and soybean meal. In fact, we have to logically make the argument that, if China decided to buy only South American beans, it would be nearly impossible to garner enough supply. U.S. prices would still benefit. The bottom line is that the supply of beans, whether they be Northern or Southern Hemisphere, will both either directly or indirectly help to feed the world.
 
As for trade pacts, this may be the wild card. President-elect Trump has seemed adamant in suggesting that the U.S. has not received the better end of recent deals. There again, only time will tell what might really happen. Perhaps stronger positioning for American agriculture will occur. There are many who doubt this, yet there were many who thought the stock market would suffer a huge setback if he won the election. Just the opposite has occurred. The stock market has moved into new highs almost daily on expectations and hopes that things in Washington will change for the better.

There’s always a honeymoon stage with a new president. The key will likely be the people that President-elect Trump surrounds himself with, and how they help to steer him (as well as Congress) into decision-making processes. For now, it’s anybody’s guess, and we remain hopeful. It is possible this president will ignore polls and do what he believes to be the right thing, regardless of popular sentiment.
If you have questions or comments, or would like help in creating a balanced strategy for your operation, contact Bryan at Top Farmer Intelligence (800-TOP-FARM, ext. 129).

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