Crop outlook and competition put pressure on barley
Fierce competition for export business and expectations of a large, quality crop are piling the pressure on barley markets.
Feed barley prices off the combine are between £103/t and £108/t, with malting premiums at about £10-15/t over feed values for winter barleys with a maximum nitrogen content of 1.8%.
Spring malting varieties for brewing are about £139/t to £143/t ex-farm for October to December, with distillers looking for a maximum of 1.6% nitrogen and paying about £10/t over the brewing price.
Malting barley growers with crop still to sell need to watch the market carefully, said Gleadell sales director Stuart Shand. If we get good crops, premiums could tumble, as they have done post-harvest for the past three years, he warned. However any quality issues could see premiums moving sharply higher.
Already sitting on large carryover stocks from last year’s bumper spring crop, maltsters were about 75% covered in the October to December period and 40% covered after Christmas, said Mr Shand.
However, there would be very good south-coast demand for spring malting barley exports.
As ever at this stage of harvest, yield and quality reports vary widely. While there have been some high screeings and pinched grains, the general impression is good.
Feed barley prices are following the wheat market down and meeting only lacklustre demand across the EU. Many UK buyers are holding back in expectation of a wider gap opening up between wheat and barley prices.
On the export front, Russian, Ukrainian and Romanian barleys are cheaper than UK grain and the continued strengthening of sterling is making the job harder, said GrainCo’s Gary Bright.
Like most merchants, he has never bought less grain pre-harvest than is the case this year. The path of feed barley prices would be determined by its relative value to wheat and corn, where a huge crop was expected.
The HGCA’s latest survey shows the total UK barley area down 8% for harvest 2014 but with a 38% increase in winter barley area. The total spring barley area fell sharply in most regions.
Barley market factors
- Maltsters have heavy stocks, 60% of crop in malting varieties
- Spring barley area down for 2014 – quality issues could make things tight
- Fierce competition in feed barley export market
- Strong sterling and large European harvest hampering exports