Fears grow for malting barley crop
The UK could be facing a shortage of malting barley this season as winter and spring crops suffer from poor yields and high nitrogen contents.
Around 80-85% of winter barley has been cleared from areas south of the Humber, with around 25-30% remaining in Yorkshire and nearer half still to be cut in the Scottish borders.
Merchants report overall yields down by more than 20% so far, with a large proportion of crops coming in above the 1.9% nitrogen required by maltsters and brewers.
“This is the worst barley crop I’ve seen since 1984,” Gleadell‘s Stuart Shand said. “Normally, we’d see barley average 1.8% nitrogen, but currently it’s nearer 1.95-2% and could be over 2% once everything’s in. We’ve even had one load up to 2.8%.”
As a result, malting premiums have almost doubled from last year – which was on the back of a large carryover – with spring malting spec varieties worth around £50/t over feed and winter malting varieties at a £35-40/t premium. Spot feed barley was worth about £147/t ex-farm as Farmers Weekly went to press on Wednesday (10 August).
But with so few crops having met malting quality requirements so far, many end-users were waiting to see how spring crops performed before making buying decisions and merchants reported virtually no trading on spot markets.
Initial reports from early spring malting varieties cut in southern England suggested these had performed better than expected, but there were signs they could follow a similar trend to winter crops, with lower yields and high nitrogens, Mr Shand said.
“Everybody’s trying hard to take barley on allowance as it’s in nobody’s interest to not get every tonne delivered. Even so, the country could possibly be short of malting barley this year, instead of exporting the 250,000t we did last year.”
Openfield‘s David Dowsy said some buyers had already raised maximum nitrogen specifications from 1.8 to 1.9%, but said trading would remain very limited until the quality of all winter and spring crops was known. “Crops in the south west of England appear to be faring better with more in the 1.7-1.8% nitrogen region, which is all very useable. There are some good looking crops in Scotland too, but [spring] harvest hasn’t started yet and further heavy rain could cause some quality issues.”
With much malting barley sold on forward contracts, NFU combinable crops board chairman Ian Backhouse advised growers concerned that crops wouldn’t meet specification to contact their merchant as soon as possible. Although the dry spring weather was largely to blame for crop problems, this was a normal risk of contracts and force majeure was unlikely to apply, he said. “At the end of the day a contract is a contract and it’s there to protect both parties – farmers as well as merchants,” he said.
Market response
With wheat harvest just getting under way in the UK, markets have remained relatively unchanged on the week, as global economic concerns have worked against uncertainty over crop yields and condition.
London feed wheat futures closed at £161/t on Tuesday (9 August), with May 2012 priced at nearer £168/t and November 2012 at £151/t. However, Thursday’s USDA crop report could alter market sentiment.