Malting barley premiums are firming as wet weather here and in other northern European growing areas puts remaining spring crop quality at risk.
Premiums for winter malting samples at maximum 1.8% nitrogen are in a range from £10-20/t above feed, while spring barleys (max 1.85% N) are £18-28/t more than feed. The range is mainly a question of location rather than quality, with about 90% of potential malting samples making the grade so far this season.
Prices and premiums rose by £5-6/t last week in a lively market, said Jonathan Hoyland, head of barley at Frontier.
In the short term the market was quite favourable and some locations could see price spikes, but these tended to be short-lived so producers should be ready to move if they saw an opportunity, he said.
Further ahead, prices will depend on the quality of barley still to be cut both here and in Denmark and parts of northern Germany, as well as on the quantity of barley released from intervention.
Stores have good stocks of high-quality barley with good malting potential, which EU maltsters will be keen to use to put pressure on open-market premiums. French winter malting barleys were of good quality but the spring crop was affected by rain.
“The UK balance sheet is now much tighter and the quality of those last crops to be harvested is now very influential,” said Mark Smith, grain trading director at Saxon Agriculture. “It could get quite lively once we have worked through the existing stock.”
Ukraine’s exit from the world barley export trade this season and the rise in world wheat prices have both had a huge firming effect on barley values in the past few weeks. Although maltsters started the new-crop marketing year with good stocks, they have begun buying again over the past month, traders say.
Generally UK barley quality was “useful” rather than the “vintage” levels seen in the past two seasons, said Mr Hoyland. Nitrogen levels were generally well within requirements, but germination is the crucial quality criterion and it is this which is potentially at risk in late-harvested crops. “In theory there’s plenty to go round, but most important is the bit yet to be cut.”
Spring barley harvest in Scotland is only just starting while in England anywhere between half and 100% has been cut in different regions.
• Premiums for 2011 malting barleys are higher than for the current crop, although the base feed barley price is lower. With premiums between £30/t and £40/t over feed barley prices, spring barley gross margins are approaching some of those for first wheats and growers should be thinking about covering sales of some of their next crop, said Frontier’s Jonathan Hoyland.