Import demand for malting barley increasing in Europe
The supply situation for malting barley in Europe remains tense, a shortage is expected. The current situation in logistics complicates matters further.
The drought has caused greater quality losses in spring malting barley this year. The yields are often inadequate. The availability of processed goods varies, depending on whether the maltsters and brewers accept the protein content. Denmark reports a smaller harvest on a larger area than last year, only half of which was deemed fit for brewing.
An export of around 500,000 tonnes instead of the usual 1.0 million tonnes is considered realistic. Although a surplus of 1.2 million tonnes is expected in France, it is not enough to meet demand elsewhere in Europe. With an export of around 1.5 million t of winter barley from France, demand in Belgium, the Netherlands and Germany is covered by 1.0 million tonnes. Export malts are produced from there.
The UK surplus of around 300,000 t cannot sufficiently satisfy demand. Normally, 500,000 to 600,000 t are expected from the island. Here, the market participants are concerned with the question of what happens after Brexit. The goods are still to be traded until March 2019. Beyond that date, there is hardly any business with Great Britain. The difficult situation on the rivers in Europe complicates business further. The British sea warehouses are full of goods. The goods flow stagnates as transport to Europe is limited. The transport situation from France is also difficult. In Germany, the amount of barley fit for brewing varies greatly. With a protein content of up to 14 percent, the farmers have to rely on the maltsters’ goodwill. Depending on their acceptance, the market performance will be between 45 and 60 percent. Germany is already an import country. The usual import demand is around 1.0 million t. Land warehouses are already largely cleared due to the tense situation on the rivers.
Similarly, the question of the availability of brewing barley in the south and east of Europe arises. Despite extensive modification of the specifications, there is a significant under-supply in Austria. Again, the market performance of their own barley is only at 70 percent if 14 percent protein is accepted. A shortage is also assumed in the Czech Republic and Slovakia. The situation in Poland is similar, with only 15 to 18 percent of barley suitable for brewing.
Willingness to compromise required
The deficit in the EU could add up to 500,000 t depending on the willingness of the processing industry to compromise. Goods from Russia and Ukraine are already processed primarily in Eastern Europe. Another possible scenario would include imports from Australia, Argentina and Canada. In Australia, a smaller barley harvest is already expected. In Argentina, a good harvest can be expected, which however will probably be sold as feed barley. In Canada, farmers report the first snow in their fields. The qualities will also find more use in the feeding trough. Apart from the question of price, the variety will become more decisive this year. Varieties that are recommended, for example, for processing in Germany within the framework of the “Berliner Programm” will not be sufficient for the demand in Germany. Other varieties will need to be used.
Surprisingly in this situation, the prices for spring barley have declined in recent weeks and have not changed significantly since then in a very quiet market. Brewers and maltsters have withdrawn from the market and are waiting for cheaper deals, as they have apparently received primarily good quality. Shallow waters on the rivers impede not only the entire industry and the procurement of barley, but also malt transport. A resulting backlog demand for barley could be another reason for the weaker prices. Brewers’ requirements are covered until the second half of 2019. The question will be whether the goods can actually be delivered for qualitative and logistical reasons.
From today's point of view, the harvest 2019 will be around 25 to 30 EUR / t cheaper. Despite the current high prices for the goods, the acreage next year is expected to be smaller, maximally unchanged. Only in France a larger area of spring barley is expected. With supply being this tight, the processors need an early harvest.
