EU: Malt market continues to show full capacity use well into 2021

The EU malt market continues to show a full capacity use until well into 2021 and a large increase of long-term agreements (LTAs) until 2022/23, H. M. Gauger GmbH said in their November report.

Maltsters are fully sold, most of them cannot respond to inquiries from domestic and international brewers for deliveries in 2019 and 2020. Therefore quite a few brewers have secured unpriced quantities for future years.

Because of higher malting barley prices for new crop barley brewers have only bought approximately 25–30% of their 2021 malt demand at fixed prices, but the total committed malting capacity incl. LTAs is closer to 60-65%.

It is obvious that malting margins have improved under these circumstances, they are reported at plus/minus EUR100 per tonne of malt. That looks good for the time being, but is not yet a great incentive for further industry expansion, the Gauger analysts said.

Present European energy and climate policies point strongly to higher production cost for the malt industries.

For some nearby deliveries much better margins were bid, but they are no help, when factories are sold out. Average prices of crop 2020 malt range from EUR 390,- to 420,- both delivered to domestic breweries and FOB seaports, in bulk in container.

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