Asian grain markets see limited reaction to likely Trump victory

10.11.2016

The grain markets in Asia were seeing little response to the surprising Trump lead in the US presidential election Wednesday, unlike more liquid and “financialized” commodities such as gold or crude oil, said wheat and corn traders in the region.

With Chicago wheat and corn futures only posting small declines of 0.5%-1.5% as the likelihood of Trump’s victory grew, the main concern for the regions’ grain market participants was the potential for sharp foreign exchange movements, which largely failed to materialize.

In Australia, wheat traders kept a close eye on the Australian dollar, which has a strong bearing on the country’s export prices. But while many had forecast that a Trump victory would strengthen the Australian dollar versus the US dollar, few had predicted that a sharp fall in Australian equities would bring the Australian currency down with it.

As a result, the Australian dollar had Wednesday lost about 1.5% against the US dollar at the end of the trading day. This has prompted exporters to consider lowering their US dollar-denominated offers to attract buyers, as they could now afford to do so.

“We could possibly lower our export cargo offers by $1-$2/mt, but it’s still too early to gauge the implications of currency and US election on Australian wheat,” said an Australian-based trader.

Some Asian procurement managers have been holding off their grains purchasing in recent days, but not just because of the US election, they were also waiting for the US Department of Agriculture’s latest monthly World Agricultural Supply and Demand Estimates, or WASDE, due to be published Wednesday.

But while Asia showed little immediate signs of reaction, traders did not rule out Chicago futures seeing some volatility during US trading hours Wednesday.

“[Chicago corn] futures market will go down” in case of a Trump victory since most futures markets would be expected to fall, said a Japanese corn trader.

Platts

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