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8 May 2009
Malting barley – A bleak outlook in 2009
It
is a traditionally quiet time of year in terms of barley trade with
consumers covered until Northern Hemisphere new crop. Underlying
support for new crop values is coming from firmness in world wheat and
oilseed values. Malting barley prices have stabilised somewhat
following a significant fall in 2008 – off all time highs.
World malting barley supply
IGC
expect world barley production to decline 10mmt in 2009/10 to 145.9mmt
although much of this decline is pegged for Ukraine and Russia who grow
feed varieties.
Still, EU barley area is expected to be down 2.8%
(IGC) with mostly a reduction of spring (hence malting varieties)
plantings. Coceral estimate EU spring barley plantings down 4.8% and
with a return to more normal yields a reasonable drop in availability
is expected.
Heading west, Canada will have a slightly bigger area
but a return to more normal yields suggests lower availability for the
coming season. And in Australia, there is the potential to grow a
bigger crop, although weather will play a big hand in malt
availability.
In summary we expect malting barley availability to
be slightly less than in 2008, however, carryover old crop stocks will
help soften the impact.
World demand
World
demand for malting barley will be much more difficult to gauge due to
the global economic situation. There is talk of beer consumption
falling in some regions (i.e., Russia) as well as brewers changing to
lower grade raw materials to lower costs – and or lowering the malt
content in beer.
Brewers are reported to be more cautious with
their purchases although there is no clear evidence yet of the
recession affecting world beer consumption. While malting barley use in
some regions might stagnate, imports into China (a nearby market)
should continue to grow, partly due to natural growth and partly due to
an expected lower Chinese crop.
More
of this article is available in this week's ProFarmer newsletter. The
world malting trade and price outlook for 2009 as well as the
implication of supply and demand on hedging barley in 2009 are further
points of discussion.
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