For the week December corn was 16 ½ cents higher, January soybeans soared 36 ½ cents, December soybean meal was up 90 cents per short ton, December soybean oil rallied 247 points, December hard red winter wheat lost 2 ½ cents, December soft red winter wheat gained 4 ½ cents and December hard red spring wheat fell 1 ½ cents.
Speculation is running high after the election regarding what the Trump administration’s second term will mean for U.S. agriculture, especially when it comes to trade.
Jerry Gulke, president of the Gulke Group, says the election might have brought about a paradigm shift in the approach to agricultural policies.
On the campaign trail, President-elect Trump promised increased tariffs on Chinese imports on day one and threatened Mexico could even face levies if the government doesn’t assist with immigration or border issues.
The USMCA trade agreement is set to expire in 2026, and Trump also has expressed interest in renegotiating portions of the agreement he feels have not been fair for the U.S.
Gulke is hopeful that the lessons learned from the trade war with China in 2018 will guide a better path for trade under the new administration.
In fact, he thinks a new trade spat with China or any other trading partners will look much different this time around.
Gulke is hopeful Trump’s America First Agenda will include agriculture and help the U.S. regain export markets and protect domestic industries like biofuels.
He points to the renewed buying in vegetable oils like palm oil, soybean oil and canola oil as a signal that the market is anticipating that Trump might place tariffs on used cooking oil imports from China or embargo imports all together.
“The current U.S. Ag Secretary was reluctant to address the used cooking oil imports as it might cause consternation with trade, especially China,” he says. “That concern seems to be out the window.”
According to Gulke this could be positive for the future of the biofuels market and help support soybean prices and other veg oil prices.
The fundamental headwinds for price outlook are still in place, with a 470-million-bushel soybean ending stocks figure and 1.938-billion-bushel corn carryover after the updated WASDE on Friday.
Gulke says increased domestic biofuels production that consumed even another 200 to 300 million bushels of soybeans would help chew through the larger ending stocks on hand and be positive for soybean prices.
“The same goes for the higher corn carryover. A mere 12% ethanol blends versus the current 10% mandate result in the disappearance of an additional billion bushels of corn and puts ending stocks down to pipeline levels.
The price of feedstocks related to increased biofuel production in countries like Brazil and Indonesia, he says, is a testament to such a policy.
“And it severs the dependence on the Big Gorilla in the room — China,” he adds.
Gulke says the other change he sees is the Trump administration possibly brokering a deal in the Black Sea that would allow the war to come to an end in Ukraine.
That could also have major implications for the U.S. and global wheat market moving forward.
For more information contact Jerry at info@gulkegroup.com.
