The ongoing US-China trade stand-off and associated trade tensions have resulted in a shift in global grain markets. And for Australian grain exports, this means looking in new directions too.
The premier example of the global shift is the deepening of the China-Brazil soybean trade. Brazil's soybeans have accounted for 70 per cent of Chinese imports over the past two years, up from 47pc over the previous five.
This has fostered the development of market relationships and encouraged Brazilian soybean hectare expansion and investment in Brazilian supply chain efficiencies.
The result is that even with the signing of the US-China phase one deal, competitively pricing US beans into China is now more challenging than before the trade stoush began, making a sustained return to the US-China soybean trade volumes of pre-2018 unlikely.
For Australia, the first shift we need to make is for barley. Over the past 18 months, China's imports of Australian malting barley has declined, while our feed barley trade to China has slowed to a relative trickle.
"Drought-high" prices here in Australia and China's investigations into the pricing of Australian barley have discouraged trade. But even if both these issues are resolved, the prospect of China returning to buy Australian feed barley is not bright.
With China committing to buying more agricultural goods from the US under the phase one deal, it is expected to favour more US corn, dried distillers grains and sorghum as imported feed grain options in an effort to meet those commitments.
China has also been importing more barley from a broader range of origins than in the past and has offered phytosanitary access to barley from new markets, such as Kazakhstan.
All of this on top of softened Chinese feed grain demand due to African Swine Fever - demand which might be softer for longer if coronavirus market disruptions are not resolved soon.
News of other market access gains for Australian barley is therefore well timed.
The Indonesia Australia Comprehensive Economic Partnership Agreement has now been ratified by both country's parliaments.
The agreement includes preferential access for an initial 500,000 tonnes of Australian wheat, barley or sorghum for feed grain each year, growing at 5pc per annum thereafter.
It is true the bulk of feed grain used in Indonesia is corn. However, over the last decade, Indonesian feed grain consumption has not only grown at 9pc per annum, but the proportion that is corn has fallen from 99pc to 82pc in 2018/19.
Feed wheat, a relatively small part of the Indonesian feed grain market 10 years ago, now accounts for close to 18pc. So Indonesia is a growing feed grain market, which has shown the capacity to rapidly adopt new feed grains when the local balance sheet tightens. This bodes well for acceptance of Australian barley and sorghum as feed grain options.
In other news, the Indian government has altered its malting barley fumigation requirement for Australian imports. India has long specified methyl bromide fumigation, but will accept phosphine fumigation which is critical because methyl bromide damages malting potential.
These pieces of good news will not be an immediate panacea to reduced Chinese demand for Australian barley, but are important in helping Australia shift within global grains markets.