The 2012 elections are in the books. President Barack Obama will serve another 4-year term, while the Democratic party retains control of the Senate and the Republican party keeps control of the House of Representatives.
So, what's it all mean for agriculture? The early consensus is that, in the short term, the election results likely will be overtaken by ag fundamentals in the grain marketplace. In the longer term, there are macro-level variables that Tuesday's elections could influence the industry farther down the road.
The big picture
Wednesday morning saw a feeling of disappointment in Tuesday's presidential vote on the CME Group trading floor, says Trean Group Options specialist and Agriculture.com Market Analyst Scott Shellady. It's spawned more question marks early Wednesday, both on the macro level and fundamentally to agriculture.
"The 'fiscal cliff' now looms as well as Friday's [USDA crop production] report," he says. "Traders are pretty disappointed. There's still a ton of uncertainty."
The "fiscal cliff" Shellady says is now on many traders' minds refers to tax rates that are set to increase on January 1, 2013, without action by Congress, which Shellady says isn't likely until as late as the second quarter of 2013.
"One change that all taxpayers should be aware of is on January 1, 2013 the tax rates will be increasing for all Americans. What? Didn’t our candidates say they would not be raising taxes?" says Ohio State University Extension economist David Marrison. "Actually, Congress did not vote to increase your taxes, but rather are allowing the Bush-era tax reductions enacted in 2001 to expire. Thus higher rates will return in 2013."
Still, others are cautiously hopeful that there will be action on this issue in the coming weeks.
"Americans reelected President Obama and left Congress split with Democrats in charge of the Senate and Republicans in charge of the House," says John Roach of Roach Ag Marketing Ltd. "Maybe Washington will be more willing to take on the hard decisions, but that is more likely wishful thinking than reality."
No huge changes
From the farm policy standpoint, experts don't expect huge changes based on Tuesday's election results. Jay O'Neil, senior ag economist at Kansas State University, told Dow Jones Newswires that farm payments could see slight cutbacks in the next year, but those cuts will be in line with similar cuts in spending throughout the federal budget.
Beyond the farm program and the next farm bill -- which lawmakers say will be taken up again soon -- biofuels policy is another area where Tuesday's outcomes won't have a huge effect. MaxYield Cooperative industry analyst Karl Setzer told Dow Jones Newswires Wednesday that he doesn't expect issues pertaining to ethanol blending and requirements at the federal level to change much, at least in the near term.
What about the grain marketplace? Though macro-level factors do weigh on the grains one way or another, those variables aren't expected to see enough change to alter the balance of how they affect prices, says U.S. Commodities grain broker and market analyst Don Roose.
"So far, what we have in the election is basically nothing really changes. I think what the market's saying is we're going to have to just keep going forward, looking at the fundamentals and making decisions based on those," Roose says. "Can things really change? We're at some timeframes where some responsibilities are going to bubble to the top and we're going to need some bipartisan support."
But, the overall influence of Tuesday's voting will in the short term be fairly short-lived, especially considering USDA's releasing monthly Crop Production and World Ag Supply and Demand Estimates (WASDE) reports on Friday morning. Those reports are just a couple of factors that will quickly take over the election results in market influence.
"The dominant issue today is not the election. It's more about what [Friday's USDA] reports look like," Roose says. "And, what does the weather look like in the southern Plains and what is going to happen in South America?"
Ag crowd reactions
Reaction from mainstream commodity groups were muted early Wednesday. The National Corn Growers Association issued a brief statement congratulating President Obama on his win.
From National Corn Growers Association president Pam Johnson:
"The National Corn Growers Association congratulates President Obama on his successful re-election for president of the United States. Our organization has worked closely with the president and Secretary of Agriculture Tom Vilsack over the past four years on issues important to our members. We greatly value our relationship with the administration and look forward to continuing that trend.”
From National Farmers Union president Roger Johnson:
"On behalf of NFU’s membership, I congratulate President Obama on his re-election. He has shown his dedication to rural America over the past four years, and we will continue to work with him and the administration to ensure that continues. We will also continue to press Congress to pass a new five-year farm bill to be signed into law before the end of the legislative session on Dec. 31, 2012."
The American Soybean Association's website makes no reference to the election results. It continues to identify key issues in Washington for the soybean industry, including reinstatement of the biodiesel tax incentive, trade expansion, FY-2013 budget and appropriations, and transportation and infrastructure. ASA also is calling for policies that "make farm programs more efficient, effective, and defensible."
