Malting Barley News January 2021
Firstly, we wish you all the very best for the year ahead, although hard to believe we are nearly through January. 2020 was certainly a testing year and 2021 has set off on the same foot, things can only improve as we start to emerge from the winter months, the evenings are already stretching out and crops appear to be moving although not enjoying current wet conditions. As well as all things Covid, 2020 was shrouded in uncertainty. One of the biggest concerns we had was with Brexit and how that would play out for the economy at large but in particular exports into Europe. As is well documented the negotiating teams came up with an 11th hour deal which means that we can continue to export UK produce into mainland Europe, tariff free, for the foreseeable future. It is therefore ‘business as usual’ on the export front and apart from some customs clearance paperwork involving guarantee of origins etc. it looks pretty straightforward. We are due to load a Laureate vessel next week so we will put it to the test. Our shipping agents and maltster customers on the continent are all working together to ensure it remains straightforward. Great news for what is a very important market and one which we continue to work closely with.
The Market
The impacts of successive lockdowns are clearly damaging for the malting sector with demand for beer dramatically reduced as the hospitality sector is shut down once again. The same applies right across Europe with the one bright spot being the export of malt from Europe into third countries, with South America seeing strong beer consumption. The rampant feed grains market, which has taken pretty much everyone by surprise, driven partly by insatiable Chinese demand has almost eradicated the malting barley premium in Europe. The result will be all remaining barley will head down the feed barley route as large vessels are loaded and exported, mainly to China. As with the UK, this will mean that malting barley stocks will be at record lows as we head into harvest 2021 right across the northern hemisphere, with the forthcoming 2021 growing season still to navigate and a much-reduced area of malting barley to go in the ground compared to last year, the situation will remain on a knife-edge well into this year. The counter argument is clearly the ongoing lack of demand from the brewing sector. This market will therefore depend upon how successful the vaccine roll out is and how quickly governments allow lockdown restrictions to be eased. However, based on extremely low stocks and pent-up demand, as and when things do return to some sort of normality the effect on malting barley premiums could be very positive. It is also worth noting that the barley you have in the ground or will sow this spring is not likely to be brewed with until late autumn 2021 or at some point during 2022. Also worth noting that the distilling sector, bar a few Covid related shutdowns, is working flat out to lay down spirit where capacity was lost last year.
So, in conclusion please do not listen to the doom and gloom merchants, there remains a very strong reason to grow your malting barley for the brewing and/or distilling market as we have strong demand from both domestic and overseas maltsters and the weather is bound to have a say somewhere before the combines roll in the northern hemisphere.
Varieties
Laureate will be the No 1 variety in the UK by some distance this year with RGT Planet as the second most popular variety. Laureate seed is running very short now, reflecting the level of demand and its widespread acceptance for both brewing and distilling. You will have noted that we have backed the variety for some time, whereas others have not, we recognised its dual-purpose appeal and robustness in the field quite some time ago.
Diablo and Tungsten are both great varieties for ‘low nitrogen’ producing growers and SY Splendor looks a useful brewing only variety which will take over Propino’s diminishing place in the running order. There is really no financial advantage to you to look beyond these varieties.
Harvest 2022
A bit early to flag this up but we are seeing some very strong demand indications for winter malting barley for harvest 2022, although the crop will struggle to meet the output of some spring barley crops it does have lots of other advantages.
Maltsters, Brewers and Distillers are all looking at how to improve supply chains and build in factors that consumers are requesting, we are talking to many of them on this topic and we look forward to talking to you about these opportunities as the season unfolds, it is a useful indication of the likely robust demand that will return as time goes on.
Looking out on a very grey, wet January day is not overly positive but the signs going forward do fill us with optimism for the malting barley sector.
As always if you have any issues/questions please do contact your usual Robin Appel contact or e-mail enquiries@robin-appel.com
