How Do Agricultural Markets See Trump 2.0?
Soybeans were an unlikely star of the first Trump administration. After the US imposed tariffs on numerous Chinese products in 2018, China responded with tariffs on numerous US products, including soybeans. (This was the topic of my second ever Ag Data News article, way back in June 2020.)
As a result, US exports of soybeans to China dropped to essentially zero from September 2018 through February 2019, which is usually the season with the highest exports. Overall, soybean exports to China were half their normal value in the 2018/19 and 2019/20 crop years. They have since rebounded back to pre-2018 levels.
In a 2021 research paper published in Food Policy, my co-authors and I estimate that China’s retaliatory tariff decreased US export prices by about $0.74 per bushel (7.9%) in the second half of 2018. As compensation, the US government sent checks to farmers that were several times larger than their losses from this price drop (see this Ag Data News article).
So, what about Trump 2.0? On the Energy Institute blog this week, Lucas Davis showed that the election result had no effect on oil and gas prices. I was curious whether the same was true of corn and soybeans.
During the campaign, Trump promised larger tariffs this time around, which suggests the possibility of a larger soybean price drop if China responds in kind.
The figure below shows hourly soybean prices for futures contracts for delivery in November 2025. I use this price because it reflects traders’ expectations about prices following the 2025 harvest.
In the plot, green bars show hours when prices increased and red bars show hours with price decreases. The little mark on the left of the bar is the price at the beginning of the hour and the little mark on the right is the price at the end of the hour.
Between 7pm and 9pm central time on election night, when it started to become apparent Trump would win, the price dropped by 13 cents per bushel (1.3%). However, it rebounded the next morning. By afternoon, the price was back to where it had been the previous afternoon.
Another way that federal policy could affect agricultural prices is through biofuel mandates. About a third of the US corn crop goes into ethanol, a gasoline additive, and more than half of soybean oil is used to make biomass-based diesel, a petroleum diesel substitute.
During the first Trump term, his administration had a mixed approach to biofuels. It exempted small oil refineries from biofuel mandates (reducing biofuel use), but it also encouraged rule changes that could increase ethanol from 10% of gasoline to 15%. The Biden administration has also been relatively friendly towards 15% ethanol blends, and it has pushed policies to use biofuels for aviation.
Corn prices decreased by less than 1% on election night and rebounded by 1.8% the next morning. These small price responses suggest that corn traders do not see the new administration substantively affecting corn markets.
The stock market is up about 4% since the election (depending on the index), suggesting that stock traders believe Trump 2.0 will be good for corporate profits. However, corn and soybean prices have barely moved, implying that agricultural commodity traders see little change for the major agricultural crops.