EU: Malting barley premiums dented by strong start to French and German spring sowings
A strong start to French and German spring barley sowings, coupled with a benign winter, has dented Europe's malting barley premiums – at a time when the North American market is being undermined by brewer retreat too, Agrimoney.com reported on February 28.
Premiums on European spring malting barley fell back by nearly EUR4 a tonne last week, "as growers in France and Germany began their sowing campaigns early", traders at a major European commodities house said.
"With perfect drilling conditions being reported widely across the continent, it is expected that they will experience further downward pressure on premiums."
French spring barley sowing as of February 20 were 17% complete, up from 6% as of the same data last year, according to FranceAgriMer.
Malting barley house Evergrain noted a drop of some EUR7 a tonne in premium over two weeks, although focused on the key French market, helping drive to EUR35 a tonne a gap over feed barley which had stood at EUR56 a tonne in the run-up to Christmas.
Besides the strong start to European sowings, France's winter barley crop, a major source of the country's malting barley supplies, "appears to have done well, with hardly any winterkill reported" so far, Evergrain's Matthias Wree told Agrimoney.com.
Furthermore, demand in Europe was proving "not so good", he said, contrasting with firm demand for feed barley, which had helped support prices of the barley complex overall.
"The feed barley market is quite stable, after these orders from importers," most notably Saudi Arabia which purchased 1.5m tonnes from Argentina, Australia and the European Union at $186-196 a tonne, on a cost and freight basis.
Ideas of soft demand have been reported in North America too, where the International Grains Council said last week that "with some brewers reported to be reducing contracted acreage for malt barley, US plantings are projected to decline".
The IGC pegged overall US barley area for this year's harvest at 1.0 mln hectares on a harvested basis, a decline of 2.4% year on year, foreseeing a 0.8% drop to 2.2 mln hectares in Canadian area.
Two weeks ago AAFC, Canada's farm ministry, flagged that "for the second straight year, malting barley contracting in the US barley states has declined," saying that after a boost to inventories from two strong harvests "large US brewers continue to reduce barley area under contract.
"Some of the northern US states report that 2017 malt barley contracting is down by 20-60% from 2016."
For Canada itself, AAFC forecast a drop of 3.3% in overall barley sowings for the 2017 harvest, to a three-year low of 2.50 mln hectares.
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