Now that Donald Trump has been elected to another non-consecutive term as President, Karl Setzer with Consus Ag Consulting says the commodity and equity markets both had mixed reactions to the news on Wednesday.
“The initial reaction was that President Trump historically does have a strong tendency to favor business and is pro-business,” said Setzer. “That caused the U.S. dollar to surge a full two points. The equity markets all put in new contracts highs, so that side took off to the upside.”
However, he says that some traders still have their concerns about Trump’s trade policies once he returns to the White House.
“At the same time, President Trump also has a very strong tendency to place tariffs on trade partners when he doesn’t see that we’re seeing equal trade,” he says. “That caused sharp losses in the commodity complex overnight—especially on soybeans because of the potential fallout with China, our leading buyer.”
By mid-morning on Wednesday, trade in the grain markets as the session progressed and much of the early losses in commodities were erased while the outside markets remained firm. At close, November soybeans ended three-quarters of a penny higher, while January soybeans were two cents higher.
Overall, Setzer adds that the markets Wednesday simply had a “knee-jerk” reaction to Trump’s election win. By midday on Wednesday, the commodity markets were already focusing on positioning ahead of the Federal Reserve’s decision on interest rates on Thursday afternoon and the release of the USDA’s WASDE report on Friday afternoon.
“Now, we will just sit back and watch everything and see what policies will change between now and when President Trump takes over,” says Setzer. “We have to remember that even though he’s President-elect, we have eight weeks before he takes office. We will find out if China is really concerned with these tariffs or not by how much you trade we see with them and how much they can get bought before he’s actually sworn in.”
President Trump will take office on Monday, January 20, 2025.
