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Ag & the State of the Union: Obama talks trade, banking restrictions

Wednesday's State of the Union speech by President Barack Obama was light on ag-related issues. But, some other issues typically thought to be decoupled from agriculture could carry some implications to the industry, some say.

The only real ag-related comment from President Obama came about midway through his remarks and focused on trade. He says his administration's set a goal to "double our exports over the next 5 years, an increase that will support 2 million jobs in America.

"To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports and reform export controls consistent with national security," Obama said Wednesday night. He added this will include efforts to seek new markets for U.S. products, including ag goods. That means signing new trade deals with other nations.

"We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores. But realizing those benefits also means enforcing those agreements so our trading partners play by the rules," he said. "And that's why we'll continue to shape a Doha trade agreement that opens global markets, and why we will strengthen our trade relations in Asia and with key partners like South Korea and Panama and Colombia."

The more immediate effects from Obama's remarks, though, don't center around trade, analysts say. Heading into Wednesday night's State of the Union speech, some bullish traders remained fearful of the Obama administration's pledge for restrictions on banks' derivative trading activities.

"This could reduce demand by hedge or index funds for various commodities, including grains, which would have a bearish impact on these markets," says Vic Lespinasse of GrainAnalyst.com.

Traders were listening closely to the President's speech for more information about this plan. However, what the market watchers heard was less rhetoric on restricted trade regulations, Lespinasse says.

"President Obama sounded a similar tone in his State of the Union speech, as expected, but perhaps more importantly, he moderated his tone regarding bank derivative trading. This could reduce the pressure most commodity markets, including grains, have been under ever since the president said his administration would crack down on banks' derivative risk taking."

Wednesday's State of the Union speech by President Barack Obama was light on ag-related issues. But, some other issues typically thought to be decoupled from agriculture could carry some implications to the industry, some say.

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