Brewers 'nervous' as malting barley hopes diminish
Malting barley premiums look set to remain strong thanks to the spring plantings setbacks rendering North American brewers "nervous", and seen sparking a sharp rebound in import needs in the key German market.
The malting barley premium over feed, which has already recovered in Europe from nominal levels late last year to E40 a tonne, "will remain high for the coming months", RMI Analytics said.
"The supply and demand balance for the coming crop on 2-row spring malting barley in the European Union looks far less optimistic compared to last year," the Swiss-based consultancy said.
"In addition, we expect negative news in the weeks ahead concerning weather and hence plant development, which will immediately push prices higher."
German imports to soar
The comments came even as market estimates emerged of a sharp drop in spring barley plantings in German, potentially by some 40% to 360,000 hectares, because of the cold and wet spring, with the south east of the country seen particularly a risk.
A decline of the level suggested "will leave Germany, Europe's biggest user of malting barley, with over 1m tonnes to import next season", UK grain traders at a major European commodities house said, terming the slice a rare piece of fortune for Britain's own rain-plagued growers.
"This is good news for UK malting barley growers," major suppliers of malting barley to Germany, "who will look to utilise this extra demand".
Germany's import needs in 2012-13 are estimated by Evergrain, the Swiss-based broker, at 265,000 tonnes, although this is an unusually low number, depressed by high domestic sowings of spring barley last year following a cold snap which forced farmers to abandon many winter crops.
'Malting industry is nervous'
Prospects for production of spring barley, the source of most malting barley, in North America have also deteriorated with the persistent snow cover which has prevented farmers in northern US states and much of the Canadian Prairies from making a start on plantings.
RMI said: "Comments from farmers across the snow-covered area is that they will be lucky to get their crops sowed by the beginning of June," even assuming land is not flooded by snowmelt.
With supplies of left-over 2012 barley "very tight", brewers "are starting to take further coverage into 2014 deliveries but the general sentiment in the malting industry is nervous", RMI said.
Force majeure, or "act of God" clauses in barley delivery contracts in Canada and North Dakota "become more likely to be enacted as the potential late crop becomes ever more likely".
Late plantings imply a late harvest, exposing crops to the risk of early frost, and a decline in malting quality.
agrimoney.com