The price of malting barley has come under considerable pressure due to the outbreak of the corona virus. Demand has virtually come to a standstill, as a result of which the price drops and is now equal to the price for feed barley.
Agrifirm reports this to its members. Due to the closure of catering establishments and the suspension of events - to prevent the spread of the coronavirus - beer consumption has fallen significantly. That demand is not picking up for the time being, now that the government has not yet announced any relaxation of the measures for the catering industry. Moreover, it has now been announced that all events until September 1 will be canceled in any case.
Ample barley supplies
The result is palpable. Malting companies are currently unable and unwilling to buy barley, even at a low price. Agrifirm reports this in a letter to its members Boerenbusiness has faced. And this while there were already ample barley supplies. The result is a declining market.
According to Agrifirm, this means that sales of the 2019 harvest are now slower than normal and that storage costs are rising. Batches of malting barley that have not yet been sold are declining in value. These can be (partly) processed into feed barley, but at lower prices. Agrifirm indicates that no barley is currently sold with malting barley premium. 'The current barley price is a feed barley price.'
The price of feed barley on the regional exchanges is still fairly stable for the time being. On the world market, barley prices even rose in mid-April, despite the pressure from the declining use of malting barley.
Agrifirm pool price
For growers from the Agrifirm malting barley pool, the majority of the malting barley has already been sold and delivered. The brewing premium earned from this goes to the pool. Although the premium for the 2019 harvest is less high than in previous years.
Consequences for the 2020 harvest
There is a good chance that the current market situation will affect the sales of the 2020 harvest. The duration of the current measures, such as the closure of the catering industry, but also the phase that follows is very important. How long will it take before the desired sales level is reached again?
In addition, it area of spring barley appears to be considerably larger in the European Union. The growing season is decisive. It started off very dry, but with a normal harvest brewing premiums could come under pressure anyway. And that is separate from the developments in sales as a result of the corona crisis.