Evening Report | November 6, 2024

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Rural America votes strongly for Trump... Donald Trump garnered nearly two-thirds of the rural America vote, even stronger support than from that segment in his first administration. That’s despite Trump’s tariffs policies, which are likely to cause frictions with China and possibly others.

Trump also won strong support among working-class voters. The AP VoteCast survey, which included more than 120,000 registered voters nationally, showed he won 55% of voters without a college degree. That was up from 51% in 2020 in his race against Biden. Harris, meanwhile, struggled to pull together the diverse coalition that elected Biden in 2020, and she was weighed down by negative views of the economy under the Biden administration.

Xi, China better prepared for Trump this time... When Donald Trump first started a trade war with China in 2018, Beijing found itself on the back foot and unsure of how to respond. This time President Xi Jinping is better prepared for a fight, even as he has more to lose, Bloomberg reported.

Trump has threatened to put tariffs of as much as 60% on Chinese goods – on top of a range of export controls on advanced technology the Biden administration has tightened since Trump left office.

Since Trump was in the White House, China has taken strategic steps to ensure it’s more resilient and well positioned to strike back. Key to that has been expanding its toolkit, which now includes export controls on critical raw materials, in addition to tariffs on agricultural goods and an entity list that can target key American companies.

Still, Chinese President Xi Jinping would much prefer to avoid a tariff battle that risks proving much more devastating than the first round. Potential options for Xi, said Scott Kennedy, a senior adviser at the Washington-based Center for Strategic and International Studies, include targeting American companies with sizable interests in China, selling U.S. treasuries, devaluing the yuan and doing more outreach in Europe and Latin America. If China chooses to devalue its currency to make exports cheaper there are risks of irking other trading partners around the world, who might in turn put their own tariffs on Chinese goods.

If a trade war erupts, U.S. ag exports may again be the first target. Since Trump’s first term, Brazil has strengthened its position as the largest soybean supplier to China and is now also the biggest source of China’s corn imports, replacing the big spike of U.S. exports to China as part of the 2020 Phase 1 trade deal. In 2016, the U.S. supplied more than 40% of Chinese soybean imports, but that had fallen to less than 18% in the first nine months of this year. Demand for pork — as well as corn and soybeans to feed pigs — has also slumped. That means China is less reliant on imports and can more easily shift purchases from the U.S. to other nations.

China is more equipped to fight a trade war this time around, but ultimately, Beijing would prefer to strike a deal with Trump. The incoming president has signaled he would be open to Chinese investment in the U.S., which could potentially form the basis for some sort of agreement, according to Henry Wang Huiyao, founder of the Center for China and Globalization research group in Beijing.

Xi called Trump on Wednesday to congratulate him on the victory, CNN reported.

International reactions to Trump’s return to White House...

· Israeli Prime Minister Binyamin Netanyahu referred to the outcome as “history’s greatest comeback,” signaling strong approval and a continued bond between the two leaders.

· Indian Prime Minister Narendra Modi referred to Trump as a “friend,” reflecting close ties and potentially anticipating cooperative efforts.

· Cautious optimism from Western leaders: France, Britain and Italy’s leaders expressed a diplomatic hope for future collaboration, signaling their willingness to maintain stable relations with Trump while hedging their tone.

· Far-right leaders in Europe cheered, indicating ideological alignment or a belief that Trump’s policies resonate with their political goals.

· Ukrainian President Volodymyr Zelenskyy gave restrained praise by highlighting appreciation for a “peace through strength” approach. This suggests caution from Zelenskyy, likely stemming from Trump’s past relationship with Russia and potential implications for Ukraine’s security situation.

Modest changes expected in USDA’s November crop reports... USDA’s corn and soybean crop estimates aren’t likely to change much in Friday’s Crop Production Report. Barring any supply-side surprises, adjustments to usage forecasts will impact changes to 2024-25 ending stocks. USDA’s global wheat production forecasts might draw the most attention given declining private crop forecasts for several countries. The following pre-report estimates are from Reuters; Bloomberg for cotton.

Russian wheat stocks plunge from year-ago... As of Oct. 1, total Russian wheat stocks totaled 38.7 MMT, down 14% from last year, SovEcon said. At the end of the previous quarter, wheat stocks stood at 20.3 MMT, up 21% from last year. SovEcon said the sharp year-over-year change during the past quarter was due to lower production and active exports. SovEcon said a record 15 MMT of wheat was shipped during the first quarter of 2024-25.

Record September pork exports... The U.S. exported 549.2 million lbs. of pork during September, which was a record for the month. Pork shipments declined 11.0 million lbs. from August but were 36.9 million lbs. (7.2%) above year-ago. Through the first nine months of this year, U.S. pork exports stood at 5.243 billion lbs., up 242.9 million lbs. (4.9%) from the same period last year, as big increases to Mexico, South Korea and Colombia more than offset declines to China, Japan and Canada.

The U.S. shipped 239.6 million lbs. of beef during September, up 1.3 million lbs. from August and 8.4 million lbs. (3.6%) from year-ago, but down 19.4 million lbs. (7.5%) from the five-year average for the month. Through September, the U.S. exported 2.250 billion lbs. of beef, down 66.2 million lbs. (2.9%) from the same period last year, as increases to Japan and Mexico were more than offset by declines to the other four top trading partners.

Brazil’s soybean exports slow in October, corn virtually unchanged... Brazil exported 4.710 MMT of soybeans in October, down 1.4 MMT from September and 890,000 MT less than last year. Through the first 10 months of this year, Brazil’s soybean exports totaled 94.2 MMT.

Brazil exported 6.406 MMT of corn during October, down 16,000 MT from September and 2.042 MMT less than last year. Through September, Brazil shipped 30.7 MMT of corn.