Big premium on the cards for malting barley

Friday, 6 February, 1998

By Robert Harris

MALTING barley growers can expect premiums of up to 30% above the feed barley price for the foreseeable future, according to traders.

Prices should stay at or near recent levels, around £100/ tonne for harvest movement of top samples, provided exchange rates remain stable.

“Unless maltsters, distillers and brewers pay a fair premium, we run the risk of a very uncomfortable supply and demand scenario,” Alan Macdonald of the Institute of Brewing told delegates at last weeks National Malting Barley awards in London.

Michael Banks, of Bedfordshire-based merchant Banks Agriculture, said prices will be shored up by an estimated 8% reduction in winter barley plantings.

“I think we are going to see a drop in the spring area too,” he said. Poor quality barley last harvest is the main reason for the shift, which could see output at no more than seven million tonnes.

A lower carry-over of stocks in maltings will increase demand too, Mr Macdonald pointed out. And early Continental interest bodes well for exports, he added – even though the strong Pound will restrict upward movement.

But intervention stocks will also keep the lid on prices longer term, added Mr Banks. He predicted that one million tonnes of UK barley will be stored in intervention by the spring.

Intervention is failing to support the UK barley market because stores that are open are not spread evenly across the major producing areas, said Mr Banks.

Farmers receive less for their barley less then their Continental counterparts as a result, he maintained. “Barley should offer growers a return of £80/ tonne.”

Grain could be transferred in situ on the Continent, avoiding the UKs high transport costs which were only partly offset by subsidies, he explained.