Malt market brewing

By James Urquhart - AWB

In grain market wires it has been wheat and canola that have been hogging the headlines of late, however barley markets are also starting to attract some attention providing good news for growers of Australia’s second largest winter crop. To a large degree the gains in barley have been made on the coat tails of wheat however there has been some barley specific inputs that are starting to reflect in what growers are seeing on offer from the market. 

Due to the extended drought in Canada and harvest rains and associated quality issues in the key malt growing regions of France and Germany we have started to see new-crop malt spreads coming to life. Both Canada and the EU region have been replacing Australian malt barley exports into China, but with Canada’s supply not expected to extend beyond their own domestic demand and half of the EU crop anticipated to have some sort of weather related quality issue, the global malt market is beginning to detach itself from the feed barley market. 

Furthermore, with Europe opening up post-COVID restrictions maltsters there are drawing down heavily on supplies and with minimal stocks in the pipeline are looking to secure malt for 2022. In stark contrast to that, with the ongoing social restrictions here in Australia and the broader Oceania/Asian region, maltsters are experiencing an unseasonal slow-down, putting pressure on malt storages. Once vaccination rates reach the required levels and restrictions are eased, we should expect to see a bounce in demand from South East Asia.

In recent seasons malt premiums have virtually been non-existent and rather than risk any sort of yield drag or agronomic drawback by specifically targeting malt quality growers have been incentivised to produce bulk feed barley. With the market signalling a renewed appetite for malting quality, many growers will potentially reconsider their harvest plans, including decisions about whether they forgo the opportunity to make malt by spray topping barley, and where they store the harvested grain. Good harvest malt prices could potentially see increased volumes of barley delivered into the bulk handling system to more easily extract those premiums, however opportunities certainly exist for those who prefer to store at home. 

ISCC sustainability certification is also an important harvest consideration to ensure growers are able to extract the best available price for their malt. Whether we like it or not, global supply chains across all consumable commodities are moving in this direction and ISCC provides a creditable, independent and internationally recognised certificate, ensuring market access to beer manufacturers across the globe. 

The national barley crop is shaping up to be a big one, and despite a reduction in hectares, at 13-14mmt this year’s crop quite possibly exceeds last year’s 12-13mmt. With quality unknown and very little grower engagement, it would be unlikely to see the premiums currently on offer erode ahead of harvest. However, with a crop of this size, the future of local malt premiums depends a lot on how much makes the grade.

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