Brexit piles pressure on malting barley market
© Tim Scrivener A short export window before 31 October, alongside good quality and yields, are putting malting barley prices under pressure.
No shipments are expected to leave the UK after mid-October because of the export tax risk of a no-deal outcome.
Premiums for spring barleys such as Planet, Laureate and Propino are at £8-£12/t above feed values for samples with a maximum 1.85% nitrogen.
The lowest premiums are in the south of England, which has the largest supplies at the moment and the greatest harvest pressure.
For the distilling market, premiums are £15-£20/t for maximum 1.65% nitrogen, mainly for Laureate, Concerto and Diablo.
Midweek, spot feed barley values ranged from £116-£122/t ex-farm, with merchants in most regions quoting £118-£120/t. Values were similar to a week earlier.
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In many cases, better-than-expected yields are compensating for the lower prices and premiums.
The market started the season well supplied with stocks from the 2018 harvest, so maltsters and distillers were in no rush to stock up, said traders.
A good start to the spring crop harvest has left domestic buyers comfortable that they will be able to secure supplies, whatever the outcome of the Brexit negotiations, and most are waiting until after 31 October to go into the market for any real quantity.
“Consumers can see there is a good crop,” said Richard Howe, senior malting barley trader at Openfield. “If we’re not able to export it, that will add to the price pressure on the feed market.”
Pulses update
Bean prices have come under pressure as old-crop trade dries up and in anticipation of a large new-crop.
At about £200/t ex-farm for October/November, few farmer sellers have been tempted into the market so far.
Domestic feed users of beans are finding the home-grown product too expensive compared with imported peas, but traders say the new-crop price has held up relatively well considering the drop in other commodity prices.
A huge increase in the size of the bean crop, to possibly 600,000t-plus, is expected compared with last year’s bean crop of about 450,000t.
Some new-crop business has been done for export to Spain and Italy, as well as to Egypt, said Frontier Agriculture pulse trader Andy Bury. This trade is not subject to the export tax fears on other crops such as wheat.
Grower price risk
Growers will have to weigh up that risk, and bear in mind that barley yields are good and there is a risk to storing malting barley long term, he said.
Another issue is the forecast of variable weather, which could change things in terms of quality, say traders. While there are no immediate concerns, this would be a factor for growers to consider in their marketing plans as harvest progresses.
The French crop is also of good quality, while early indications from Scandinavia show similar results.
Low nitrogen content
Low nitrogen levels in the south of England are particularly challenging for some exporters, as some contracts include a minimum as well as a maximum nitrogen level. The minimum for spring export barleys is generally at 1.44% or 1.52%, and some are coming in below this level.
This would not usually cause a problem, said traders, as cargoes can be blended to bring them to the right specification. However, the short export window until 31 October means there is less opportunity than usual to do this.
Feed barley opportunity
UK feed barley is currently the cheapest in the world and is gaining export business.
The low pound and good-quality barley are helping, but another market factor is at play, said Mark Smith, managing director of Saxon Agriculture.
Black Sea growers have in the past been weak sellers at harvest, with poor storage and the need for cash driving heavy export sales.
However, the past few years has seen significant investment in storage and better credit lines for these growers, making them stronger sellers and less dependent on moving grain early in the season, said Mr Smith.