UK: June 2020 malting barley use the lowest June figure since 1990
In June 2020 UK brewers, maltsters and distillers used 116.9 thousand tonnes of barley, according to AHDBs latest statistics on cereals usage. This is 29% lower than June 2019 and the lowest June figure in our electronic records, which go back to July 1990. These figures highlight the continuing impact of the coronavirus on the industry.
It means that in 2019/20 a total of 1.77 mln tonnes of barley was used by the sector, 6.4% less than 2018/19.
This is very different story to what was expected before the full extent of the coronavirus outbreak became apparent. In February, Human and Industrial (H&I) usage of barley in 2019/20, which also includes a small amount of food usage along with usage by brewers, maltsters and distillers was forecast to rise by 2%.
By May, a drop of 5% in H&I usage compared to 2018/19 was forecast in the AHDB balance sheets, suggesting that at least 117 thousand tonnes of barley demand had been lost due to the pandemic. The June usage figures, depending on food usage of barley, suggest that this figure could be slightly higher still. The end of season estimates will take into account the full season usage and trade data and are typically released in the second half of September.
Pubs and restaurants were able to re-open in England from 4 July, with indoor service in Scotland from 15 July and in Wales this week. However, its far from business as usual with consumer confidence impacted and social distancing measures reducing capacity.
Furthermore, the road maps for the different countries of the UK suggest that business as usual seems unlikely for some time yet. Equally, local lockdowns could provide additional challenges. As such, its reasonable to assume that malting demand for barley will remain under pressure compared to pre-coronavirus levels in 2020/21.
These factors compound what could already be a challenging season ahead for barley. The large barley area planted for 2020, and an estimated sizeable carry out from this season (with many processors demands shored up to some degree with their 2019 purchases), looks set to keep supplies high.
Meanwhile, the possible tariffs UK barley exports face into the EU after 1 January (unless a trade deal is agreed) could shift export patterns. There will also be tougher competition for feed demand due to the global availability of maize, coupled with the zero import tariffs placed on maize post 1 January from the UK government. Together, these could all pressure barley prices for some time to come.
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