Barley market quiet despite harvest

By Robert Harris

MALTING barley harvest got off to a flying start this year, but the same cannot be said for the market.

With a surplus on the cards, consumers are showing little interest few farmers are selling and prospects of a marked upturn look slim.

About a quarter of malting barleys have been cut, and low nitrogen levels are the main concern after plentiful rains, says Cargills Chris Toft.

“Very few samples are in the 1.55-1.75% range, where the maltsters want it,” he said. “But we are not into the bulk of the crop yet.”

Premiums vary from £5-10/t over feed, which is averaging about £67/t ex-farm although bids are very conservative, agreed Nigel Goodhew of Soufflet.

“There is almost no market for Fanfare. Regina is worth about £6-£7/t over feed. Halcyon is worth about £19/t at 1.65%.”

The HGCA forecasts a barley harvest of just 6m tonnes, but usable malting barley is put at 2.2-2.4m tonnes, suggesting a small malting barley surplus.

This, and fiercely competitive international malt markets will hang over the market, said consultant Michael Gutsell.

“Maltsters have had to deal with the strength of sterling and the unpredictability of the EU export campaign,” he said.

“Brewers also operate under increasing competition, making use of cheaper malt supplies.”

Michael Banks of Banks Agriculture said intervention prices for November are, at current exchange rates, worth about £7/t more than spot feed values.

Demand for feed barley is improving; Iran bought 100,000t this week, and Iraq and Saudi Arabia may come to the market soon.

Improved Third country trade for malting barley might also help, with EU supplies looking very competitive, he adds.

“We understand that Brussels will start to open tenders for the open market from the beginning of August.”

But the UK barley area could crash in the coming season unless maltsters and brewers sent “stronger signals” to farmers and the trade, Mr Banks warned.

“Growers are asking our farm traders what they should grow,” he said. “They are finding it a little worrying that we cannot give them advice.”

Given forecasts of very low premiums, many farmers will not grow malting barley without a contract, he added.

“If total production falls below 5.5m tonnes next harvest, I would see this as catastrophic for the UK malting barley industry,” he said.

“The UK could become a net importer of malting barley.”