07 February, 2007

EU: Malsters should avoid the risk of major price changes in the barley markets

A year ago malt for the crop of 2006 was sold at levels of EUR 230,-/240,-, leaving malting margins of EUR 50,-/60,-, sometimes less, against the market prices of malting barley before the harvest, market analysts commented. According to them, the catastrophic barley crop catapulted barley prices to the level of the former malt sales.

One must stress the fact once more: if maltsters cover bad malt sales now, they book losses of EUR 150,-/200, - per ton, on basis of a production cost of about EUR 100, - per ton. It looks as if most maltsters have learnt their lessons; they know that there is at least a balance of supply and demand, maybe even a short of malt also for the next crop year. They need a malting margin well above EUR 100,- in view of the risen cost of energy, transport etc. And they must and will do the malt sale/barley purchase operation on a back to back basis to avoid the risk of major price changes in the barley markets.

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