The Agricultural and Horticultural Development Board (AHDB) is confirming that UK malting barley premiums are at historically high levels.
As of October 12, the gap between the UK average spot ex-farm price for premium malting barley and feed barley was £71.20/t. In the same week last year, this premium was £28.60/t.
As a consequence, AHDB analysts expect this widened gap in prices to continue as the season progresses.
Back at the beginning of October, total availability of barley was estimated at 8.336Mt, down 101Kt on the year. This was due to a smaller crop outweighing a rise in opening stocks.
According to the AHDB, total barley availability is also slightly down on the previous five-year average of 8.595Mt.
On top of an overall decline in availability, the proportion of the crop that is meeting the higher quality malting requirements is expected to be lower.
The recently published UK Cereal Quality Survey results confirmed lower specific weights, poorer screening levels and high average moisture content year-on-year.
The survey results also indicate that nitrogen content for both winter and spring barley is comparable to last year and marginally higher than the three-year average.
It can also be expected that global availability of malting barley will be tighter this season.
Total global production of barley in 2023/2024 is forecast to be the lowest since 2018/2019, and global ending stocks are expected to be the lowest since the early 1980s.
Much like the UK picture, quality is a concern elsewhere as well, with the wet weather in Europe at the beginning of harvest impacting the crop due to delayed cutting.
Despite concerns over the cost-of-living crisis, barley usage by brewers, maltsters and distillers (BMD) is estimated to be up on the year.
UK demand for distilling is expected to remain robust from increased capacity coming online last season.
So far this season (Jul-Sep), total barley usage by the BMD sector has totalled 477.6Kt, up 3.6% on the year.
Over the previous five seasons, on average, the BMD sector has made up for 99% of total human and industrial barley consumption.
Using this proportion, based on the first estimates, barley use for BMD in the UK can be expected to reach about 1.971Mt this season, up 7.1% on the five-year average and just marginally higher than last year.
A tighter outlook for barley both in the UK and globally, combined with further concerns over quality, means supply of premium malting barley looks limited this season, according to the AHDB.
With a strong start to the season for the BMD sector and expectations that demand will remain firm, it is likely that UK premiums for malting barley will stay elevated in at least the short-term, if not for the remainder of the season.