To All Growers of Malting Barley
I am sure you will all agree that 2021 has been an extraordinary year and there seems no doubt that 2022 will follow suit.
The volatility we are now witnessing in markets is set to continue with many factors at play, most of which we collectively have little or no control over or ability to predict. However, in the UK we remain consistent producers of high-quality barley which stands you in great stead going forward.
Please find below some key issues affecting the market at present.
Harvest Year 2021-2022
We always knew the market would be tight this season but poor barley crops in France, Germany and Canada and lower yields in Scandinavia have all contrived to make the supply side even tighter than anticipated. It is not just the cricket that has not gone so well In Australia, with rain damaging quality and therefore lowering the tonnage of malting barley available. Strong global demand for beer and therefore malt, underpins the market and covid permitting looks set to remain.
The key drivers for the rest of this season and those that will shape 2022-2023 are:
Record low global feed barley and malting barley stocks.
Increasingly volatile global weather conditions.
Good autumn planting conditions in northern hemisphere.
These 3 drivers make the forthcoming malting barley outlook rather compelling and also sit malting barley on a knife-edge where only a big, near perfect malting barley crop in the northern hemisphere will go some way to replenishing stocks.
Closer to home the UK spring barley area will be back down toward its ‘normal’ area with the crop being grown on the more traditional soil types and regions associated with malting barley.
Whilst the latest Omicron variant is not good for the hospitality sector and will doubtless have different effects on different sectors of the industry, we do not think it will diminish demand enough to fundamentally affect the supply and demand situation we are looking at.
Harvest 2022 Varieties
Once again we have seen that Laureate is a more robust barley than Planet and would suggest that for 2022 you look no further than Laureate. Skyway looks interesting as a brewing only variety but will need another year before we look at it too seriously. If you really need another variety, Planet can still perform in the right conditions and LG Diablo does well but is not as consistent as Laureate.
Harvest 2022 Contracts
In a normal year current forward prices would be crazy to ignore but selling malting barley forward at a flat price brings with it a high level of risk. We suggest therefore that you look at the following:
Min premiums over feed barley.
Premiums over LIFFE wheat.
All of these options guarantee you access to the most suitable markets as well as the ability to benefit from any uplift in the malting barley market. Current premiums for 2021 crop are around £70-£80/t, absolutely unheard of, but a reflection of how short the market is. Harvest 2022 premiums are around £20-£30/t so you can see that the market is already pricing in a return to a ‘normal’ size crop, time will tell on that!
This has been a huge problem this year and is something we need to be more aware of going forward – increasing levels of grass weeds and grass margins and non inversion tillage are two main reasons, but of course unfavourable conditions during flowering can be the main problem and serves to exacerbate the issue.
Yet again we have witnessed a lot of discrepancy between farm moisture meters and our infratecs, this causes issues with hitting contract specs and can also jeopardise quality of grain in store. Please do feel free to send in samples or ask us to pick fresh samples up to ensure that your barley is as dry as you think it is.
Malting Barley Conference
This is scheduled for Monday 17th January but looks increasingly like it will fall foul of the latest surge in Covid cases. If we do have to pull the event we will do an ‘on line’ version as we did last year. You will need to register and we will send you a link.
You will be more than aware that logistics have been a real struggle this year and we would like to thank you for your patience and help in getting your barley moved. Freight rates for sea passages have more than doubled and haulage rate increases have been steep (not before time), the result has unfortunately delayed some movement but thanks to some fantastic hauliers and our very own Anna and Claire, we have done a lot better than some companies. However you have been extremely understanding of the situation and worked with us to get lorries loaded in good time and helped us supply our contractual obligations, we are extremely grateful for that and it shows the benefits of working together over many seasons.
We have all once again negotiated an interesting year and look forward to what 2022 brings. On behalf of everyone at Robin Appel Ltd we wish you, your family and farm staff a happy and peaceful Christmas and look forward to talking to you in the new year.