World: Farmers may have to offload malting barley more cheaply for animal feed
UK barley farmers like Brett Askew cant wait for pubs to reopen, but its not the pints theyre missing most, Bloomberg reported on May 21.
Like many European farmers whose wheat plans were thwarted by a wet autumn, the Brit waited for weather to improve and turned to later-planted spring crops like barley, which he plans to sell to maltsters. The timing couldnt have been worse.
Closing pubs and restaurants and canceling sporting events and festivals like Germanys Oktoberfest has hurt demand for malt used to make beer and whisky. Brewers and malt producers have shuttered or scaled down plants, just as European barley stockpiles are set to hit a decade-high. That means farms may have to offload crops more cheaply for animal feed.
What happens and how it plays out, I have no idea, Askew said by phone from his farm in northern England. The crops in the ground, we have to see it out for the harvest. But whos going to buy it?
About a sixth of the worlds barley is used in malt, though the share is higher in regions with intensive beer and whiskey sectors. Stockpiles in the European Union, the largest grower, will jump 14% to 6.6 million tons next season, U.S. government data show, and French malting barley prices recently hit the lowest since at least 2015.
Malting barley needs to be stored in specific silos to maintain its quality, and with the next harvest starting around June, many growers wont have room to keep supplies at their farms until demand recovers.
Belgiums Boortmalt, the worlds top malt maker, expects to cut purchases from farmers, while Malteurop temporarily shuttered four North American plants.
Theres really no trade in malt crops because theres no demand, said Brent Atthill, managing director at RMI Analytics AG. In fact, its the reverse with maltsters trying to get rid of barley that they can predict with good accuracy they dont need. They know theres another crop being grown at the moment.
Malting barleys premium over the feed variety has narrowed on lower demand, and overall prices could drop further, he said. The U.S. government expects next seasons global barley inventories to swell almost 7% to a five-year high.
In the U.S., small brewers have seen most of their market dry up, and draught beer stuck at breweries or delivered to retailers that soon shut is being dumped, turned into hand sanitizer or being composted, the Colorado-based Brewers Association said. In Europe, maltsters are trying to delay or cancel barley deliveries, German industry group Braugersten Gemeinschaft said.
All those arenas shut down, concerns, restaurants, thats a lot of beer not being consumed, said Wade McAllister, vice-chair of the Alberta Barley Commission. You cant drink that much beer at home to keep up.
Its not just a beer slowdown worrying farmers. The Scotch Whisky Association said theres been a drop in grain demand as operations are scaled back, though it hopes theres a quick recovery when restrictions are eased. Last year in Scotland, more than half of spring barley went into malt production to help supply the highest concentration of whisky producers in the world.
In four to five months from now, or even before then because of winter barley, grain will be seeing the combines and needing to find a home, said Peter Loggie, crops policy manager at the National Farmers Union Scotland. Its a big problem.
For farmer Askew, even if the drinks sector starts getting back on its feet this year, the barley market will remain sluggish for much longer.
There will be a large carryover of this product into next year, he said. The impact is going to be felt for far more just the next six months. It will be more like 18 months to two years.
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