Global markets are crucial to Australian agriculture, with many commodity sectors – including grains and oilseeds – highly dependent on exports to market their production. “This exposes our agricultural industries to overseas risks, such as political swings, trade policies and currency volatility,” said RaboResearch analyst Vitor Pistoia.

Mr Pistoia said the upcoming US election in November is a notable case in point, with the outcome – regardless of the winner – potentially causing shifts in US internal and external policies, which likely reverberates in global agricultural trade. “This is due to the large role the US holds as a global economic and geopolitical player and its heavy footprint as a food importer and exporter,” he said.

Mr Pistoia said the potential scenarios and implications of the election outcome are many and varied, but for the Australian food and agri industry it is worth considering a few.

“A continuation of the Democrat’s grip on power – under a Kamala Harris presidency – might be seen as a business-as-usual agenda,” he said. “Public spending on the energy transition is likely to remain in place, supporting the demand for biofuels. A continuation of the current biofuels policies is important for reducing downward price pressure from the growing global stocks of corn and soybeans, key commodities in setting the general price trend in soft commodities. Conversely, high biofuel production also brings the byproduct of animal feed, increasing the US export potential of soybean meal and supporting US animal protein exports.”

The Rabobank analyst said a Harris presidency would also see new policy agendas, including more robust public investment, which tends to devalue a country’s currency while boosting economic growth, at the expense of national debt.

“This could pressure the US Federal Reserve to maintain the cash rate at an elevated level for longer to balance inflation, potentially triggering other country’s central banks to move in the same direction to maintain the balance of the US dollar relative to other currencies. Thus, such a race would impair overall economic growth and reinforce stagflation.”

Mr Pistoia said if Donald Trump makes his way back to the White House, a weaker US dollar, at least initially in his term, is a likely scenario. “This voluntary devaluation would be the “carrot” to bring industries back to the US, a key element of Trump’s campaign. And also, to bring jobs back, Trump’s proposal of a 10 to 20 per cent import levy across the board would be the “stick”. The end game might also be inflationary for the US economy, potentially even greater than Harris’s spending proposal.”

He said another impact of an initially weaker US dollar under a Trump presidency would be a theoretical reduction in the country’s overall imports – giving more room to local manufacturing and demand and increasing exports. “This is a big watchpoint for Australian grain and oilseed (G&O) and beef exports, as the US’s competitiveness in supplying global markets would increase.

“On the G&O front, the US is one of Australia’s significant competitors in the Asian wheat market, and a top global exporter and importer of beef.”

Regardless of which side is victorious in November’s election, Mr Pistoia said, it is crucial for Australian agricultural producers to maintain their focus on profitability drivers, optimisation and diversification of overseas products and markets.

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