UK: Higher feed base price, lower malting barley premiums

UK’s malting barley market is focused on concern for quality and yield, with late sown spring crops well up in most regions, but needing a good dose of sun, Farmers’ Weekly reported on June 5.

Merchant stores are clear of barley and maltsters have adequate stocks to carry them over until they are able to see what the 2024 harvest offers, say traders.

UK maltsters use 1.7m to 1.9m tonnes of barley a year and while the weather has forced the spring area well up on last year, no records are likely to be broken.

“The area is not up as much as many people think,” says Jonathan Hoyland, barley and oat product head at Frontier Agriculture.

He puts the likely rise in the English spring barley area at no more than 20% and more likely in the high teens, compared with the 2023 area. The Scottish area is largely unchanged, he says.

Despite the late drilling, English spring barley crops are probably ahead of where they were at this time last year, says Jonathan, having gone into warmer soils and with plenty of moisture.

This compares with last year when a cold, dry May hampered growth.

Among significant continental malting barley producers, the French crop area is up slightly this year, by about 5%, although it went in very late.

France Agri-Mer, an agency of the French Ministry of Agriculture, recently rated 64% of the French winter barley crop as “good/excellent” compared with 66% the previous week and 88% at this time last year.

The country’s spring barley crop was rated 73% “good/excellent” against 93% for the 2023 crop at this time of year.

Denmark and Sweden have also seen a small rise in area and a recent improvement in the Danish weather has relaxed the market slightly.

Maltsters are in no rush to secure supplies until they have a clearer view on what the 2024 harvest offers, although some traders think they are less well covered through autumn than they would like.

Feed barley prices have followed feed wheat prices up over the past few weeks, although merchants warn that cheap corn will provide plenty of competition for use in feed rations in the coming season, with big tonnages already booked.

As an indication, early this week spring malting barley premiums generally ranged between £42/t to £50/t over feed barley values in most regions, putting a November spring malting sample in the mid £220s to mid £230s/t ex-farm, depending on location.

In some areas where trade is more reliant on exports, the premium is slightly lower, at £35/t to £40/t, with limited export business having been done for the 2024 crop at that level.

The most likely destinations for UK malting barley exports are Belgium, the Netherlands, Spain, Portugal, Germany and Poland, although the volume to the final two depends on the output and availability from the Baltic states.

Growers remain risk averse on committing to spring barley sales, due partly to the uncertainty over quality and yield, but also because premiums were up to £100/t last season, which were the result of a very small crop carry in, a very poor Danish crop and a mediocre French barley harvest.

While they have committed to less barley sold forward overall, many have used pools or min/max contracts to put a base value in their crop, say traders.

Min-max contracts are offering a £30/t to £70/t premium spread over feed barley values.

At Dewing Grain, chief executive Andrew Dewing describes the potential for the Norfolk spring malting barley crop as phenomenal.

“There’s a lot of straw too, but the crop does need sun,” he says. “If we get a big crop it will be trading in the low £200s a tonne. On values midweek, he put a November spring malting barley at about £225/t ex-farm in Norfolk.

“We’ve had less uptake than usual on forward pricing. Growers feel as if barley should be higher relative to wheat. The weather could push it higher – selling any crop forward is a risk, but at current levels it makes sense to book say 25% to 30%.

“We also need the Euros to go well to boost demand for beer.”

The winter sown barley wheat has had more rain than it needed and is not expected to deliver a big crop. The move to regen has resulted in wheat volunteers here and there in winter barleys, says Andrew.

Cefetra commodity trader Willie Wright says with the spring crop having gone into warmer soils, it is looking well in Scotland and East Anglia, but that Yorkshire and Lincolnshire are weaker areas.

“Premiums are about £50/t for spring barleys for the October to March run, which is lower than last year, but we have a higher feed wheat and feed barley base,” he says, putting the spring sown barley area across England and Scotland up by no more than 8% to 10% compared with 2023.

“Feed barley will come under pressure from corn for use in feed rations.

“At present, UK feed wheat and feed barley is not competitive on export markets, so if we need those markets, prices would have to come down.

“However, there’s unlikely to be more than a 320,000t surplus out of what might be a 6.7m tonne barley crop.”

Demand for beer across Europe is static to slightly lower, says Willie, with inflation and higher interest rates squeezing disposable income levels.

The Maltsters Association of Great Britain produces an annual wishlist of the proportions of barley it requires regionally at different nitrogen levels. This is the list for crop 2024:

Southern and Eastern England
Spring barley lower than 1.65% N – 26.78%
Spring barley 1.66% to 1.85% N – 44.43%
Spring barley above 1.85% N – 3.33%
Winter barley under 1.65% N – 10.65%
Winter barley 1.66% to 1.85% N – 12.68%
Winter barley above 1.85% N – 2.13%

Northern England
Spring barley lower than 1.65% N – 64.18%
Spring barley 1.66% to 1.85% N – 12.44%
Spring barley above 1.85% N – 1.99%
Winter barley under 1.65% N – 6.97%
Winter barley 1.66% to 1.85% N – 6.97%
Winter barley above 1.85% N – 7.46%

Scotland
Spring barley lower than 1.65% N – 93.54%
Spring barley 1.66% to 1.85% N – 0.47%
Spring barley above 1.85% N – 2.66%
Winter barley under 1.65% N – 0.47%
Winter barley 1.66% to 1.85% N – 2.09%
Winter barley above 1.85% N – 0.76%

The numbers

1.828m
Tonnes of English and Scottish barley bought by UK maltsters from 2023 crop

46.5
Percentage of total barley purchases represented by English crops

53.5
Percentage of total barley purchases represented by Scottish crops

1.3
Tonnes of barley needed to make 1 tonne of malt

50,000
Litres of beer that can be produced from 1ha of malting barley

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