SIMILAR to all sectors of the global economy the Australian grains industry is watching closely to see what the impact of the newly brokered trade deal between China and the US will be.
The two global superpowers announced Phase 1 of a deal had been signed earlier in the month, but there has been precious little in the way of details about what the agreement actually involves, especially within the agricultural space.
There are some reasons for nerves within the Australian grain exporting sector, with financial markets monitor Bloomberg suggesting Australia, with a strong focus on energy and agricultural exports, could be one of the big losers from the US / China deal, however leaders within the Australian grains industry are not concerned.
"I think the increased stability the deal brings in terms of international trade is a real positive," said Grain Producers Australia chairman Andrew Weidemann.
He said he was not concerned about losing market share into China, a key customer for Aussie grain, to the US.
"Australia produces a very good quality grain and the Chinese have dealt well with the Australians for a long time so I see no reason for that to change."
"The onus is on us to continue to build on those strong relationships."
Tobin Gorey, commodity analyst with the Commonwealth Bank, said while the international market was eager to find out what the deal meant at present there was not much to report.
"We are waiting to see the impact, but we will have to wait to see what happens on the ground in terms of trade, whether there are more cargoes of particular commodities heading to China because we just don't know the details.
"When there are large amounts of something moving you do not necessarily want to telegraph that to the rest of the world so both parties will probably look to keep things opaque, which means there is the potential for surprises and that is what people will be watching for."
Mr Gorey said while the deal could have negatives for Australia with our largest grain customer signing an agreement with a major competitor there was also the possibility it marked a shift in China's approach to trade.
"The deal may signal that China is willing to open itself up to the world market more," Mr Gorey said.
"We have been hearing that within China there are different opinions within the ruling group regarding trade, with some wanting further reform and this may be a step towards it."
US grain producer groups were predictably thrilled with the news as they eyed off the massive Chinese market.
U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) sent out a release after Phase 1 of the trade deal was signed off.
"Wheat farmers have experienced the harm of unfair trading practices at the hands of China for far too long, as reinforced by the recent WTO wins. This step forward in negotiations between the U.S and China is a tremendous way to begin the new year," stated NAWG chief executive Chandler Goule.
The US / China deal, the big talking point of the world trade sector throughout 2019, has taken a seat on the backburner this week, however, with world markets instead focusing on the growing threat of the Corona virus.
The scare factor from the deadly virus due to the fact there is not yet a vaccine to control it has seen sectors such as tourism and entertainment tumbling heavily this week.