16 September, 2005

EU: The difficult market conditions are to eliminate further malting capacities from the market

After concluding their domestic business in the spring at a very depressed level, the malting industry are now faced with high barley and energy prices, GlobalMalt has commented in its September Market Report.

GlobalMalt said: “The cost increases resulting from these factors amount to between 35 and 50 Euro/tonne depending on the location of the malt house. Malsters, who have not covered their needs in advance, cannot even cover their variable production costs at these contract prices.

The changed market conditions also increase the calculated price for upcoming malt exports considerably. We expect that these price increases, at least to this amount, will be passed on to customers, as the price calculated for the previous campaign was already at the level of marginal costs. It remains to be seen to what extent the European malt industry can compete in its traditional, and highly competitive, export destinations in South and Middle America and Asia.”

GlobalMalt expects these very difficult market conditions to eliminate further malting capacities from the market, so that the existing overcapacity in the EU will soon fall to clearly under 10 %. GlobalMalt hopes the upcoming world beverages trade fair DRINKTEC in Munich will perhaps already give further signals about market consolidation.

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