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Spring Malting Barley Bulletin – May 2021

MAY MALTING BARLEY NEWS

Yet another dry spring, a rampant global grains complex and the ongoing pandemic are but three issues that we are all having to contend with in trying to fathom out the eventualities of this years malting barley market and ultimately what the all-important price/tonne you will end up at.

Over the last few years, we have all contended with a lot of variables but the last 18 months have been a severe test as yet more conundrums are thrown into the melting pot, making the production and marketing of malting barley perhaps more complicated than ever. The one certainty is that now we have had some decent rains and warmer night time temperatures, we have, at the very least the foundations in place for a reasonable barley crop. Many hurdles to jump yet but looking optimistic at present.

I will cover, albeit briefly, the pertinent points around feed barley, malting barley and the drinks market and whilst not promising to have the answers, I hope it will provide some clarity and greater understanding around current situations and how things may develop in what will be a critical few weeks between now and harvest.

FEED BARLEY

Global markets are being driven by both real and perceived production problems in both the northern and southern hemispheres. Serious drought in Brazil will result in further downgrades to their production this week along with frost damage in parts of the Ukraine, Russia and eastern Europe which have yet to be fully quantified and problems with drought in areas like North Dakota are causing concern. Recent rains have swung the pendulum back in favour of better crops. A lot of this information will translate into global supply and demand alterations over the next few weeks and coupled with extreme global weather, there is absolutely no question that volatility is here to stay, this is further exacerbated by ‘non-agricultural’ fund activity taking huge positions in commodity markets which exaggerate already strong swings in prices.

Feed barley has become a popular option for animal feed around the world, being cheaper than corn and wheat, this looks set to continue with China being a major driver of demand. Only four countries (France, Ukraine, Argentina and Canada) are cleared to export feed barley in volume to China and therefore their internal barley markets trade at a premium to the rest of the world. Australia, having had their barley exports banned by China, are major players into North Africa, Asia etc, leaving the UK looking for 2021 export markets into Spain, North Africa etc…but also looking at an increased demand into our own compound industry given the gap that makes it cheaper than wheat or maize. With a lower area of barley sown and larger wheat area the barley discount to wheat should come into around £10-£15/t, that will depend upon the eventual size of our wheat crop and whether we remain as net importers or the crop is large enough to need to export. Whilst the global situation remains as it is and global demand keeps rising, it would appear that the market will remain well supported but be prepared for large swings as weather and crop reports alter the feed grain complex.

WEATHER

Dry weather abounds all over the globe affecting many regions and areas. As you know April was not only one of the driest on record but also one of the coldest in the UK with a record number of frosts. This has clearly held crops back and whilst root growth has been prodigious in that time, crops have stood still above ground and are only now responding as temperatures (hopefully) increase. Who knows what these conditions will have done with regard to take up of applied nitrogen and potential speed of growth but at present I don’t think there are too many issues to worry about. The problems in the last two seasons have been linked mainly to increased spring temperatures and dry weather in May, at present we have not endured this combination which we think bodes well.

THE DRINKS MARKET

It would be possible to write pages on this subject as the market is split up these days between high volume, large global brewers, the craft brewing sector and of course the distilling market. The overriding take home message is this: The carryover of malting barley into crop 2021 is, at best, minimal and demand for malting barley is picking up strongly. Couple this with a lower barley area and uncertain weather and you have quite a heady mix. There is no doubt demand for malt will continue to pick up as lockdown eases here and then hopefully further afield as consumers look to re-engage with normality and venture out. As you can imagine there is a huge amount more detail on this subject but our view is that prospects look good for demand into the domestic and export markets, base prices will remain promising and premiums, subject to crop outcomes, could be above the five-year average. So the emphasis is you doing what you are very good at and growing and gathering in a good quality barley crop – As always the weather will play its role but with all nitrogen applied and moisture in the soil the outlook is positive.

8th JULY 2021

We are looking to run a sensible and covid secure malting barley day in conjunction with Syngenta by kind permission of Matthew Read at the John Read Partnership at Saxley Farm, Nr Andover, Hants on the 8th July – details will be finalised soon but please do make a diary note. We have a full set of trials as always and will have industry experts on hand to provide a valuable insight into the malt and malting barley markets and prospects for the coming year. With so much going on it promises to be a useful few hours.

7th DECEMBER 2021

Please also make a note that this years Malting Barley Conference will go ahead (Covid allowing) on Tuesday 7th December at the usual venue:

The Norton Hotel, Norton, Winchester, Hampshire, SO21 3NB.

We will have an array of great speakers and make no mistake the tight situation with malting barley for crop 2021 will have implications throughout the year and impact the 2022 harvest, so should prove to be an interesting day.

HARVEST SAMPLING

Following the success of growers taking their own and undoubtedly more accurate grain samples last harvest, we plan to run with the same system this year, albeit making a few tweaks to make it easier for you to get samples to us. We will update you on this in due course. You can imagine the pressures of increasing Health and Safety precautions around employing young people to clamber up your grain heaps, the ridiculous inefficiencies of multiple companies sampling the same heaps of grain and the undoubtedly more accurate samples that you can take as grain enters the store make taking your own samples a system which we are all duty bound to make work.

As always if you have any issues or questions or would like some more detailed information please do contact your usual Robin Appel contact or e-mail enquiries@robin-appel.com