Malting Barley News
With the extraordinarily quick harvest now a distant memory, the Scottish harvest all but complete and the sudden transition to what is proving to be an open autumn, we are now able to summarise where we are in terms of 2025-2026 prospects and look to 2026-2027 for some more optimistic signals.
The Market
We gave a fairly pessimistic update to the market at our pre harvest event at Saxley Farm in June. Whilst we didn’t want to ‘sugar coat’ anything but endeavour to deliver a balanced view of how we see things. Unfortunately, those negative predictions have turned out to be correct with premiums vastly reduced and base prices on a downward trajectory as well. The main issues affecting the market are as follows:
- Reduction in alcohol consumption (especially younger generations)
- Squeeze on budgets due to high cost of living
We all know how expensive it is to eat out, let alone the cost of a pint in a pub! However, a case of beer in the off trade, especially supermarkets, remains much better value for money adding to the general demise of our beloved pubs. The demand for low or no alcohol beer continues to expand and is fast heading for a 20% share of the market. The better beers in this category do use the same amount of malt and are either brewed for longer or use an expensive process post brewing to remove the alcohol. The growth in this sector highlights the drive for people of all ages to reduce or end their consumption of alcohol, with young people seemingly leading the charge, is this a permanent change or only temporary?
All of this paints a fairly sobering backdrop to where we are within the malting barley sector. In recent years the distilling industry has powered the demand for malting barley within the UK, particularly post Covid as distillers drove production to lay down spirit that they could not use during the pandemic. That spike in production coinciding with demand reduction around the globe as well as an increase in ‘home produced’ spirit in countries like India and the USA, both big importers of Scottish whisky, has led to a glut of spirit which distillers are now trying to shift. This is in turn leading to dramatic reductions in malt demand and we are now seeing distillery shutdowns whilst stocks are reduced.
The reduced demand scenario has been incredibly abrupt and came as a big surprise as it was not long ago that the industry was flying and all seemed set fair. Big drinks companies employ teams of forecasters to predict demand; however, it seems everyone has been wrongfooted by the sudden drop off. It now appears that the pre and immediately post covid surge was all about a) meeting huge demand and then b) re stocking inventories rather than actual consumer demand. Whilst the slow down has been brutal and is causing big supply chain issues in Scotland, it is worth noting that large investments in distilleries and malting capacity are still going ahead and talk is of demand returning in 2027/2028. This message has been delivered fairly consistently in Scotland with Scottish farmers voting with their feet and reducing their barley area for 2026.
Brewing has also been in decline especially in the western hemisphere for some time as consumer habits continue to change, the reduction in demand is widespread with recent reports even indicating declines in beer loving countries like Germany. However, within that there is a trend for consumers to ‘trade up’ and drink less but better beer, with a marked increase in locally produced beer, using higher quality ingredients.
This rather negative backdrop highlights where we are currently and is unfortunately exacerbated further by two other issues, they are:
- Large European malting barley harvest
- Large carry over of malting barley
With most of Europe getting more rain than the UK during the growing season, the European malting barley crop is very good in general and provides far more useable barley than harvest 2024, both the Danish and Swedish crops are also decent. This puts a stop to any fresh export business from the UK with only existing sales and framework agreements providing a few opportunities to ship malting barley. The carryover of the 2024 crop in the UK has also been large (circa 1.3mt of barley). As you can imagine this has not helped the situation.
The UK harvest has been a real mixed bag with yields and quality hugely variable throughout England and up into Scotland.
In general, the further west the barley was grown, the better it was, due mainly to timely rains, whereas less drought resistant soils did not perform at all well, especially heading east. Low yields have not allowed for any nitrogen dilution and therefore high grain nitrogen’s have been common place. This has added to feed barley availability in the UK which in turn has been further swelled in Scotland where high screenings and low retentions are proving challenging. Secondary tillers are generally to blame but nitrogen’s and yields are generally good so a lot of effort is being put into cleaning barley on farm/ in store prior to delivery.
The Positives
Those are the reasons behind today’s rather lacklustre market, however and as always there are some real positives to keep in mind going forward, they are as follows:
The much smaller 2025 UK barley crop that will make malting grade will help clear the surplus that hangs over the market far more quickly than if we had harvested a big crop of malting barley, therefore the system is being ‘purged’ effectively and sooner than first predicted which will in turn leave the industry on ‘bare boards’ going into next harvest.
With this autumn’s sowing conditions remaining favourable there will be an increased wheat area planted. Along with SFI, AD plants and competition for other land use, we expect a decrease in the UK malting barley area of between 15%-25%, as growers are unsurprisingly disillusioned with the sector. There are reports that the area of winter malting barley sown this autumn could also be down by as much as 30%.
As touched on above, the much-reduced 2025 crop will result in a lower carry over of malting barley into 2026 and whilst we assume demand to remain subdued, there is no doubt that the supply and demand balance looks incredibly tight and any potential problem globally on the production side will inevitably result in much more realistic premiums, which we have seen in the last few seasons.
Moisture & Ergot
With reduced exports this season, we will need to deliver more barley from the south to domestic maltsters than we have done in the last few years. With the dry growing season, we were expecting to see next to no ergot this year. However, we have seen more than we expected so please could you be extra vigilant in your grain stores and keep an eye out for it, if you have any doubts, please do let us know. Where we have found it in harvest samples your quality report will mention it, however it is very hard to find that way so can be missed through initial testing.
With harvest conditions close to perfect, grain moistures really should not be an issue, however if we run into wet winter conditions etc they may creep up in store, please monitor this situation and test your barley regularly or bring samples into our labs. Please also use pit fall traps to monitor for bugs especially if conditions remain mild.
Date for your Diary
This year’s malting barley meeting which we run with Syngenta will take place at Norton Park on Wednesday 3rd December. We have some really interesting industry speakers lined up to delve deeper into the current situation as well as look forward to when and where demand will return in earnest. It really is one not to be missed for barley growers. Please save the date, further details in due course.
There is no doubt we are plumbing the depths of the malting barley cycle but as quickly as it has turned negative from the high premiums of the last few years it can and will turn around again. As always if you have any further questions or points to raise, please do ask.
Jonathan Arnold
