China potentially lifting tariffs is dampened by lack of shipping slots and trading volatility

All of Western Australia's shipping slots are already full, with no room to ship to new countries, unless exporters are willing to sacrifice one buyer for another.

Australia's barley exports to China peaked at 6.3 million tonnes in 2016-17 before falling to miniscule levels once the duties were imposed in 2020.

China was Australia's most lucrative buyer - with barley trade worth about $916 million in 2018-19.

Rural Bank senior insights analyst James Maxwell believed that Australia was not currently in a position to export to China, despite having excess supply from a record harvest.

"Even if China does all of a sudden, remove the tariffs and say 'alright, we're open for business,' how are we going to get it to them?" Mr Maxwell said.

"Our ports are already fully booked and supply chains are already at maximum capacity, there's not really much more room."

Rabobank agricultural analyst Dennis Voznesenski agreed with this sentiment in a recent video analysis, saying even if China wants Australian barley, exporters would have no way to get it to them.

"Unless the grain trade wants to move the shipping slots from other customers to the Chinese, I don't see how they're gonna get it," Mr Voznesenski said.

However, with exporters cautious of the volatility, China often pays a premium price for barley when compared to similar customers, like Vietnam.

Some exporters may be tempted to substitute newly broken into markets, like Central and South American, for the higher premium Chinese market.

Mr Maxwell warned exporters against jumping to the highest price, because although he admitted it may be tempting, diversification of customers was important for the future.

"It's pretty basic business practice that you need to diversify, if you're 100 per cent devoted to one customer or stream and that goes down, then you're done," he said.

The announcement of new barley discussions is not a promise of trade in the future, and while Nutrien Ag Solutions general manager north - region west, Andrew Lindsay, was optimistic, he was also sure to emphasise this doesn't mean trade will resume.

"More competition in the market is only a good thing for our customers and we hope this will lead to further longer term benefits for Australian farmers," Mr Lindsay said.

"Creating a pathway towards resolving the dispute over Australian barley is a step in the right direction, however it's important to remember that China is yet to make a decision to repeal any current bans or tariffs in place.

"Nutrien joins the rest of the grains industry in hoping this can be resolved and we will see China buy Australian barley in the near future."

Mr Voznesenski didn't seem as optimistic as other industry professionals that this would result in a resuming of trade.

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With Europe entering harvest in the middle of the year, if China was intending to buy barley, Australia is one of the only countries that has supply at this time of the year.

"In theory, if China needed our barley, they would come for it right now, because the EU hasn't thought of harvesting yet - it's going to be mid-year when they do - so with China reopening, the demand and feed demand are rising," Mr Voznesenski said.

"In theory, they actually need it right now."

Mr Voznesenski said by the time the review of barley trade restrictions was finished, if they wanted barley they could just buy barley from France.

Both analysts believed that China continued to be an unpredictable trading partner, and if exporters were able to diversify who they sold to, they should take the opportunity.

"I find it hard to just assume that the trade relationships improved and the political relationship improved," Mr Voznesenski said.

"I think the Chinese will likely come back for it when they need it, as soon as they don't need it they could in theory, just dump it again."