A COMMONWEALTH Bank commodity analyst believes there is the potential for Australian grain growers to benefit from the escalating US / China trade war.
Tobin Gorey said while the focus has been on the increase on China increasing tariffs on American goods by a relatively modest 5-10 per cent the big news could be if China chose to relax trade restrictions with competitors of the US.
“China has flagged potentially cutting tariffs with other trading partners, which may occur as early as October,” Mr Gorey said.
“Should China make good on this policy it would present opportunities for Australian agribusinesses,” he said.
“Pricing advantages might open up, at least against US competitors for various grain crops.”
Mr Gorey said while the trade advantages might not necessarily last permanently it would be a good chance for Australian exporters to establish their credentials as suppliers with Chinese customers.
“The game in this context is to take advantage of opportunities as they arise but not to get invested in an irreversible way.”
US farm groups remain anxious about the trade war’s implications on their sector.
Speaking after a US senate hearing on the agricultural implications of the tariffs, president of North American Wheat Growers, Jimmie Musick said his group was concerned about trade barriers in China.
“There is legitimate anxiety in farm country about the impact of retaliatory tariffs on our products,” he said.”
“The risk to farm income continues to grow the longer this confrontation with China continues and we call on the administration to do all it can to resolve the dispute as quickly as possible.”
China has showed signs it is happy to play hardball in the lead up to critical US mid-term elections, with the Chinese government-owned China Daily newspaper targeting voters in America’s agricultural heartland with a series of advertisements in an Iowa paper.
Iowa is a massive soybean producing state and bean producers are among those hardest hit in the trade war, with a 25pc Chinese import tax in place on US soybeans at present.