To All Growers of Malting Barley

I still find it hard to comprehend the reality of Russia’s ‘Special Operation’ in the Ukraine. It has certainly changed our rather comfortable way of life for the foreseeable future, if not forever. The complete shock of the situation, on top of a tight global grains balance sheet, coupled with extreme global weather (India being the latest episode) have had the most devastating impact on global markets and supply chains many of us will ever witness. How do governments, especially ours, wake up to the reality of food supplies let lone food prices? The fragility of food supplies has not really stolen many headlines as yet but, given time, it will. All we hear is how supermarkets are aiming to keep prices down and how difficult it is for consumers, will there be a realignment of consumers spending priorities? A longstanding failure to understand how farming really works and the dominance of multiple retailers has for too long allowed ‘a race to the bottom’ mentality to exist but now with a confused subsidy policy, extreme weather and huge costs the battle for acres and for food supplies looks like it will enter a whole new era.

If you have followed our bulletins, you will know that global barley stocks are at record lows. Black sea supply chains are in pieces let alone the complete unknown of what the Russians and Ukrainians will harvest in a few weeks’ time, extreme heat in India and poor conditions in mainland Europe and America (let alone here) and you have a tinderbox of a market – LIFFE wheat had reached contract highs of £360/t for Nov 22 and has retreated back to nearer £300/t, all in all a seriously confusing picture.

Ukraine Situation

It is hard to decipher between fact and fiction but by using reliable sources which generally conclude the same issues the reality is looking like this:

There is estimated to be between 22-25mt of grain/maize awaiting export out of Ukraine at present, until yesterday loading large vessels was largely out of the question so road and rail is being used where possible. Humanitarian efforts and the ‘goodwill’ of the Russians (subject to some sanctions being lifted) has the potential to start clearing the backlog. Clearly this means that there is a real battle on to move this huge volume in time for harvest. The EU have removed all tariffs on Ukrainian imports.

Spring sowings have faired reasonably well in the circumstances and it is estimated that 950,000 ha of spring barley have been sown to date, against 1.2M ha last year, estimates are that that they could harvest in excess of 5mt from 22 harvest, almost half that of last year.

As you can imagine there are huge question marks as to farm staffing levels, input availability, logistics etc, which will impact all production based in the Ukraine and will clearly have huge impacts over the next few years, we will keep you posted.

Beer & Whisky Markets

Global demand for beer and whisky is very close to pre pandemic levels and therefore malt demand is high and most maltings are running at capacity. Malting, brewing & distilling are highly energy intensive processes and therefore prices have seen significant increases over the last few months. These higher costs will have to be passed through to consumers and it will be interesting to see the impact of that on demand. Whilst the barley price clearly has an impact of final malt price calculations, other parts of the process have a far higher impact. The consumption of alcohol through pubs and the hospitality industry (the on trade) has been declining for some time whilst home consumption (the off trade) continues to grow. This has been a trend for sometime but clearly exacerbated by the pandemic and set to continue. This trend has also shown that consumers have a tendency to drink less but better thereby targeting what they see as ‘premium brands’. With the cost-of-living squeeze set to intensify over the next few months it will be interesting to see how alcohol consumption holds up following recent strong showings. Past economic slowdowns have shown that ‘having a drink’ is one of the last things consumers are prepared to forego, we must all therefore continue to keep doing our bit for our sanity and for the industry.

Interesting to note that the recent expansion of the English Whisky industry has culminated in the creation of the English Whisky Guild (EWG). This is a fast-growing sector and the whisky produced stands comparison to many famous Scottish brands. Keep an eye out for these whiskies.

Grain Markets

Thought we had seen most things over the last few years but grain markets since the invasion have surpassed anything we have ever seen. The impact and implications for poorer nations are extremely serious and will no doubt hit headlines more and more as the situation becomes clearer. Whilst the supply implications for the world are serious, the weather is only exacerbating an already worrying situation. Dry conditions in key production areas look as though they will seriously reduce global output and of course we are not immune from the dryness that is affecting many parts of Europe. Recent rains have helped calm markets but there is some way to go to ensure a good global harvest.

Barley

Feed barley is now trading around £280/t with premiums looking to exceed £40-50/t thus making the forthcoming malting barley harvest more interesting than ever. Global stocks are at an all time low and the malting barley situation looks extremely tight. There is a large deficit to be covered out of the European 2021 crop and sown areas are largely down throughout Europe for the forthcoming crop. The perennial dry springs we seem to now encounter has once again put a lid on yields especially those of spring barley and the situation is potentially even tighter. Much will depend on the weather we encounter between now and harvest; grey skies and cold temperatures in June do not make for good quality or large yields so recent rains followed by a sunny and not too hot temperatures in June should make for decent barley quality and maintain potential. I fear that the rain came too late for many crops and they shot up and not out, therefore winter & spring barley crops do not appear to be as well tillered as they could be, however there is all to play for. There are a few issues to be aware of:

Secondary Tillers

As always following a dry spell there is a high risk of secondary tillers, many could and should be viable given the conditions but worth monitoring the situation. As with the last few years, green and immature grains do not create an issue within bulks and therefore not something you should be unduly concerned about. The use of pre harvest desiccants should be avoided at all costs please.

Moisture Meters

The usual issue of your moisture meters testing below the infratecs is another annual theme. Barley moistures and the physical make up of your barley crops vary dramatically year on year and needs to be born in mind. We thoroughly recommend getting your moisture meters calibrated against new crop barley when the combines start rolling. This can be done by taking your moisture meter to your nearest lab or request new crop barley samples from us.

Monday 27th June

Our annual malting barley open evening takes place by kind permission of Matthew & Jenny Read at Saxley Farm, Abbots Ann on 27th June. Please register through the link below or call us to book a place. We have the full array of winter and spring barley varieties this year and will be joined by Jonny Roberts of Boortmalt on the day, who will be able to provide an interesting insight into European and global barley and malt issues and the price implications on demand going forward.

Haulage

With the potential of a bigger wheat crop than 2021, high fuel costs and continued driver shortages there is absolutely no doubt that haulage will continue to be an issue going forward. Improved flexibility at intakes and on farms will be necessary in order to move crops in timely fashion.

Crop 2023

Malting Barley has to compete for area and our contract structures for crop 2023 clearly exhibit that, we have the usual harvest movement capabilities and an array of export and domestic market opportunities. Lower input costs and high premiums make malting barley a popular choice for crop 2023.

Please speak to us regarding spring and winter malting barley for crop 2023

Winter Barley

Craft, Electrum, SY Vessel, Maris Otter

Spring Barley

Laureate, Skyway, Planet

We are in extraordinary times and there is no doubt that increased volatility, changing farming policies, extreme weather, high input costs and changing consumer trends will all have a very varying impact on the industry. We are well placed to help guide you through the hurdles that lie ahead and look forward to seeing you and working with you over the forthcoming season.

If you have any queries/questions please do get in touch with your usual Robin Appel Ltd contact or e-mail enquiries@robin-appel.com