In its latest report issued last Friday the International Grains Council (IGC), an intergovernmental commodity body based in London, UK, reported that total grain stocks were down this year for the first time in the last five years. Barley stocks were reduced in 2017/2018 by about 2 million tons, which is a shortfall of about 6 percent.
Reasons can be seen in the increased demand from China, whose annual barley consumption rose in the past three years to 8.9 million tons last year, after not exceeding 5 million tons in the seven years before. Also Saudi-Arabia, another big market for barley, was only partly successful in reducing their imports of feed barley. After having bought an all-time high of about 10 million tons of feed-barley in 2015/2016, Saudi-Arabia plans this year to restrict imports to about 8 million tons.
Demand estimates for Iran and Turkey have recently been increased, based on larger than anticipated import purchases. IGC statistics show 2 million tons higher barley imports for the period Jul/Dec 2017.
Given the current short supply situation the IGC predicts an increase of the 2018 barley acreage by 1.2 million ha or 2.2 percent. Especially the adverse weather conditions across Europe with poor planting conditions for winter grains in autumn and winter kill in February due to temperatures far below the freezing point may favor spring barley and other spring grains.
“The variable, partly very poor barley crops in the EU, affect malt markets. 2rs barley is priced from EUR 170,- exw inland Denmark, to EUR 185,-/190,- CIF North Sea ports, to EUR 225,-/230,- delivered South German malt houses. It leads to different malting margins, and changed competitiveness between regions and malt factories,” states H.M. Gauger in his latest market report. Malt houses in the favored regions are already more or less fully sold for the ongoing campaign whereas some unsold quantities remain at malt houses further away from North Sea ports.