Barley tightness keeps the mind busy

In the latest report from the US Department of Agriculture (USDA) a global barley yield of 147 million tons is expected for this season. A big difference from one season earlier; the harvest then amounted to 160 million tons. And the year before, the yield was also clearly higher, with 158 million tons. At the same time, world consumption is estimated at 151 million tons. In short: there is a threat of a shortage of around 4 million tons. The fact that production has exceeded production in recent seasons is currently saving the market. The closing stock is expected to reach 17 million tonnes at the end of this season, the lowest level in 38 years. One season earlier that was still 21,4 million tons.

Drought is the cause of lower yields in several barley-producing countries. For example, the barley harvest in the United States has fallen from 3,7 million tons to 2,5 million tons. In Russia, 3 million tons less is harvested, to 17,5 million tons. The Canadian harvest drops from an average of 10 million tons to 6,9 million tons. Only Australia has a good year. The yield there increases from an average of 10 million tons to 13 million tons. However, that increase of 3 million tons is still sufficient to cover the shortages in other countries. And that results, as mentioned, in a rapidly declining ending stock.

Especially demand for feed barley
It has been the case for many years that the majority of barley production is destined for the animal feed industry. Last season and this season it is just a little bit more. The demand, especially from China, is enormous. This has to do with the reconstruction of the pig herd in the country. A few years ago, the country was hit by African swine fever, which decimated the country's livestock population. Now that the outbreaks are somewhat under control, the country has started reconstruction. This obviously requires a lot of animal feed. Wheat, soy, corn, barley. Everything was therefore purchased.

The above - in combination with lower production and chaos due to the corona pandemic - resulted in higher prices. In the Canadian province of Alberta, the price for feed barley was $439 per tonne last December. That was 'only' $274 per tonne one year earlier in the same month. Prices are also clearly higher in the European Union. €2 per tonne was paid for feed barley in week 272 at EU-Rotterdam. One year earlier, in the same period, this was €211 per tonne. In week 47 the quotation peaked at €298,50 per tonne. That is the highest level in years. Also for growers high prices are increasingly a reason to sell barley to the animal feed industry.

Beer is becoming more expensive
The above is dramatic for the beer brewers. Due to the high demand for feed barley - and the good prices paid there - an increasingly smaller share is going to the beer industry. For example, Australia exported 71% more feed barley (598.205 tonnes) in November, but 26% less malting barley (61.308 tonnes). While the total harvest of barley is plentiful there. In countries where yields are lower, less malted barley automatically crosses the borders. This market situation has, not surprisingly, resulted in higher beer prices.

In the United States, brewers in the Bay Area are already reporting that a 10% price increase over the entire year would not be surprising. But there is also talk of higher prices closer to home. Major brewers such as Heineken and AB InBev mention comparable percentage increases. Smaller brewers such as Alfa, Gulpener and Lindeboom contribute 1Limburg No percentages yet, but they do ensure an increase. Not only has malted barley become 50% more expensive in some cases, higher prices for packaging materials, transport and energy also play a role, the brewers indicate. If the crisis continues, further price increases cannot be ruled out.