Wheat saw a resurgence again this week in both the nearby and futures markets. Corn continues to run at a low price, while UK analysts are looking at the effect of the Covid-19 pandemic on malting barley.
As we’ve all seen fuel prices decrease, the use of corn has also decreased in the energy sector and demand simply isn’t there. As we’ve seen before low corn prices don’t bode well for barley in this country, as feed users often opt for the cheaper imported option.
37% of US maize is used for ethanol production and, as reported last week on AgriLand, the United States Department of Agriculture’s (USDA’s) prospective plantings report predicts an increase in maize and soybean area for 2020.
Effects on malting barley
This week the Agriculture and Horticulture Development Board (AHDB) in the UK decided to look at how the Covid-19 pandemic may impact on malting barley.
Spot prices on the continent have drifted down in recent weeks, but saw a lift this Friday, April 10.
Beer sales have been impacted by the closure of pubs and, while there has been an increase in sales at retail outlets, it will not make up for the loss in turnover at the taps. The AHDB stated that the key factor in the longer term will be continued production at distilleries.Also Read: Stuck for a product name or PCS number? Check these lists…
The AHDB noted that malting barley premiums are likely to come under pressure in the 2020/2021 season as a large spring barley area has been sown in Europe. Production of malting barley is expected to outpace demand as a result.
It is still unclear what impact the reduction in consumption will have on new crop prices in 2020.
On Thursday Matif oilseed rape closed at €371.75/t. Wheat prices are improving but barley is struggling.
A spot price of €158/t (delivered Rouen) was observed for barley on the continent – on Friday morning. At the same time the spot price for Free-On-Board (FOB) Creil malting barley was €154/t. Both barley prices were up €4/t, compared with a week earlier.
This week saw the start of price averaging for Boortmalt suppliers. Many growers have fixed a price for up to 40% of their barley. The remaining 60%, or the remaining amount not fixed, will be based on an average price of the FOB Creil (two-row malting barley – Planet) from each Wednesday’s closing figure – from April 8 to September 16.
This week that price – the first of the averaging process – sat at €168/t on Wednesday evening, April 8. In the two weeks previous it had closed at €167/t.
Some of the main market prices are outlined in this table (below).