World: Hop crop estimated to be approximately 5% smaller than last year

The results of this year’s hop crop have been updated recently by the IHGC and are close to final, HVG said in its November report.

Raw hops amount to 124,000 tonnes which is approximately 5% less than in 2019. Alpha acid production is only 2.5% lower than in the previous year.

The German crop is considered a good average crop, while yields in the US and the Czech Republic are rather disappointing.

The world crop which is considered more or less normal is facing a significant decrease in beer consumption. The HVG analysts still expect a total decrease of around 10% worldwide in 2020. As of now, forecasts for 2021 or the following years are pure speculation. Therefore, there are severe uncertainties in the whole hop and brewing industry.

This situation proves once more that only taking into consideration the alpha acid balance does not provide a complete picture of the hop market as the surplus of alpha acid does not explain the market price development. Therefore, the alpha acid balance is not a good basis to understand the market and price developments of different varieties. It only gives a rough overview.

On the one hand, due to the high pre-contract ratio, only around 4,000 tonnes – 4,500 tonnes of spot hops are available in Germany in 2020. On the other hand, demand on the brewers’ side is limited. Therefore, spot prices of all varieties are significantly lower than in previous years.

At the moment, spot prices for the major varieties (Herkules, Perle, and Hallertauer Tradition) are approximately on the long-term contract level. For all other varieties, prices are significantly below this level. It remains to be seen whether spot prices are interesting enough for breweries to stock up their inventories. The insecure economic situation will probably prevent them from doing so.

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