To all Growers of Spring Malting Barley

Well off we go again for what will no doubt be another interesting year, the last twelve months have certainly held a few surprises and no doubt the next twelve will do the same.

We recorded 600mm on our Sencrop weather station here at Waltham Chase between Oct and Jan against an annual average of 390mm for the same period. The historically dry February that followed has allowed for a fantastic early start to spring planting, although soil temperatures remain low and hence emergence is slow. We estimate that around 65% of sowing is complete in England and <5% in Scotland. As much as February bucked the trend with well below average rainfall, March will do the opposite with well above average rainfall, given the forecast this week and with early April looking unsettled the remaining English crop and Scottish crop should be completed by mid-April, nothing we have not seen before, but poses some issues around final quality and yield and increases the importance of a decent growing season.

With so much going on globally there is not room to cover any one subject in too much detail, so we will tackle a few pertinent issues, if you would like further information on any point please do get in touch.

Malt Markets

Beer consumption has not faced the catastrophic downturn that was predicted, in fact the  football world cup taking place in our autumn/winter provided a welcome boost for beer sales in the southern hemisphere, particularly South America. Asia once again topped global beer consumption for the 14th consecutive year accounting for 31.4% of global beer consumption, followed by Europe at 26.5%. It is worth noting the Czech Republic came top of individual per capita beer consumption at 184.1 litres/head/year!

Having recently had meetings with some key maltster customers both here and in mainland Europe it is very clear that global malt demand continues to expand. So much so that most of the excess world malt capacity has been eliminated and that which does remain is mostly in China, that is where it will stay. Demand for malt around the world is predicted to grow strongly over the next few years across all 3 main sectors – brewing, distilling and food malt. This bodes well for UK malting barley demand as pressure on land worldwide and extreme global weather will likely reduce malting barley availability year on year. Clearly annual supply and demand will dictate premium levels but as top quality growers of malting barley the future looks increasingly bright.

There is no doubt the habits of the UK consumer have changed, some of it exacerbated by the pandemic where consumption of alcohol has moved to ‘at home’ (Off trade) instead of ‘down the pub’ (On trade). This has caused a further raft of pub closures which estimates put at an equivalent  reduction of circa 250m pints of beer. However, demand has remained good even in the brewing sector. There is now a big push for non or low alcohol beer (NoLo), some commentators suggest these beer styles could count for 20% of the market in a few years time. Producing NoLo beer still uses the same amounts of malt, alcohol (and taste) is removed at the end of the process.

The real shining light of the malting market however is the success of Scottish whisky, with any loss of brewing demand being replaced by demand from the distillers. This shows the importance of growing a dual-purpose variety with an estimated 70% of the UK 2023 malting barley demand being used for distilling purposes. Here are a few interesting facts about Scottish whisky demand:

2022 =>£6bn exports of scotch whisky worldwide.

1 bottle exported every 54 seconds.

Increase of 35% in 2022.

Double digit growth in Taiwan, Singapore, Indonesia and China.

India has replaced France as the largest market by volume but Scotch whisky is still only around 2% of the total Indian market. Currently there is a 150% tariff on imports, a new trade deal will add circa £2=3bn of imports.

25 new distilleries are under construction or being re-opened and the English distilling industry continues to grow apace. Maltsters have invested in extra malting capacity in Scotland over the last few years and Simpsons Malt are about to start construction of a new state of the art maltings on Speyside, all very exciting and positive for malting barley demand, let’s hope supply can keep pace with demand!

Barley Markets

Markets have taken a right pummelling in the last couple of weeks taking feed base prices down below pre Ukraine invasion  levels, with the high 2023 crop cost of production the situation does not look great at present and without an uplift in base prices the northern hemisphere barley crop will be all about the premium.

The malting premium this marketing year peaked at around £100/t and that is what will prove to be the determining factor of this year’s crop. The area of malting barley due to be planted this spring is down throughout northern Europe and weather issues are starting to emerge (late sowing, dry in Spain etc) so the supply ‘on paper’ looks tighter than recent years, especially against the robust demand we have discussed.  Feed barley for crop 23 trades at a nominal £15/t discount to wheat at around £195/t ex farm. Current malting barley values are as follows:

Domestic market – £235/t ex farm

Export market – £228/t ex farm

Ex farm premiums are therefore currently running at around £40 – £45/t with the domestic industry looking to attract malting barley and therefore paying a premium accordingly. (These values are only a guide and subject to change and subject to location/quality etc)

Ergot

A real problem throughout the industry and has been especially bad in parts of the south this year. We foolishly thought that last years hot weather would make life easier but apparently hot weather can exacerbate it. A lot of thought and talking is being done on the issues across all end users. With field margins, grass weeds and reduction in ploughing it is clearly here to stay, we will keep you posted on developments but something we all need to be very aware of.

Sustainability

A real buzz word amongst processors and end users, it is slowly becoming clearer as to how things will develop going forward and with alot going on there is  a real need to benchmark/streamline the system and develop supply chains that stand scrutiny and not just ‘tick boxes’, will keep you posted as things move forward.

Diary Dates

This years summer trials day is once again courtesy of Jenny & Matthew Read at Saxley Farm, Nr Andover. The date for your diary is Monday 26th June. We have some really interesting trials taking place. As well as all of today’s varieties, we will have some interesting spring and winter malting types as well as agronomic trials, wild flower margins and some interesting cover crop experiments. We will also have industry experts on hand to give us a view on current and developing markets. More details to follow.

We will once again have a stand at this years Groundswell show in Hertfordshire on the 28th & 29th June, a really interesting two days, if you are going, please do come and find us.

This years winter malting barley conference will take place once again at The Norton Manor Hotel, Nr Winchester, date for your diary is Tuesday 5th December.

Varieties

It is just worth re capping on where we are with varieties and what to look for going forward, the situation is as follows:

Fully Approved

Laureate – Number 1 variety in the UK by an increasing margin – suitable for distilling & brewing.

Planet – A brewing only variety very much on the wane, still demand here and on the continent.

Diablo – Distilling and brewing, a good variety but not as good as Laureate.

Provisional Approval/Upcoming

Skyway – Brewing only, a Planet replacement, one UK maltster accepting it from harvest 2023, no export demand at present.

Sun King – Same breeder as Skyway, agronomists like it but will the market, a distilling only variety.

SY Tennyson – Looks a good variety, dual purpose and same breeder as Laureate, could be the next one to look out for, yield advantage over Laureate on paper.

Curtis – Dual purpose variety but early reports on distilling quality not that encouraging – jury is out.

All these modern varieties are excellent in terms of performance, the key is how good they are at processing in the distillery or brewhouse, finding that out can be a long, protracted process, at present stick with Laureate, Diablo or Planet. The successful new varieties have to be dual purpose (distilling and brewing) so single use varieties will be limited in their uptake.

Hope the above gives you an insight into the malting barley market, strong demand with a vibrant and progressive brewing and distilling sector make for an exciting backdrop. The weather will be the final arbiter of every season with this year being even more important with a lower spring barley area, an interesting few months ahead!

If you would like any further information or more detail please do speak to you usual RAL contact or e-mail enquiries@robin-appel.com

March 2023