What Trump's Tax Plan Could Mean for Agribusiness

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What Trump's Tax Plan Could Mean for Agribusiness PART 1 OF 3

How Agribusiness Stocks Are Reacting to Trump’s Tax Plan

The new tax plan

The Trump administration released its latest tax plan on September 27, 2017, outlining a tax rate overhaul for individuals, small businesses, and corporations. The plan also outlined the possibility for companies operating in the US to repatriate their offshore profits back to the country with a limited tax burden.

How Agribusiness Stocks Are Reacting to Trump&#8217;s Tax Plan

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Market performance

The above chart shows how some of the major agribusiness stocks have performed since September 27. FMC Corp (FMC) was the top gainer, rising ~6.6%, while the Scotts Miracle-Gro (SMG) rose 2.3% during the same period. The S&P 500 Index (SPY) rose 2.3% during the same seven-day period, indicating a broader market lift.

But other stocks remained flat or even negative during the same period. CF Industries (CF) fell 2.5%, while Israel Chemicals (ICL) fell 2.2%. Agrium (AGU) and PotashCorp (POT) ended in the negative territory, with losses of 1.6% and 1.1% respectively.

Syngenta (SYT) and Monsanto (MON) both fell one basis point. Notably, on October 4, Monsanto released its fiscal 4Q17 and fiscal 2017 earnings. You can read a complete overview at Monsanto Reports 4Q17 Earnings: Stock Unchanged.

Interpreting movements

As you can see in the above performances, there were no wild swings following the announcement of Trump’s latest tax proposal. This is perhaps because many of the items in the new plan had already been announced in the previous incarnation of the plan, and so the market may have already baked in its expectations. On the other hand, the lack of reaction may also indicate less confidence that the new proposal will go into effect.

In this series, we’ll discuss a few of the points from Trump’s tax proposal and see how they could impact agribusiness companies going forward.


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