EU: Maltsters may be unable to meet hoped-for explosion of demand for malt
Various EU maltsters slowed down malt production during the winter months, only moderately to adjust to smaller call-offs by brewers. If the hoped for demand explosion happens in late spring/early summer, there is neither the malting capacity nor sufficient old crop malting barley to accommodate such demand, H. M. Gauger GmbH reported earlier in May.
Brewers malt stocks are close to zero, anyway. In any case, the industry will enter the new season without the usual carryover stocks, the barley crop 2021 must provide the malt for the next 12 or better 15 months, the analysts said.
Provided the pandemic is under control and beer consumption goes back to normal, malt supplies will remain tight all season. There is also a great chance that malting barley prices will increase substantially over the next months, in sympathy with bullish world grain markets, with a larger feed barley demand, and a rather small crop of malting barley in the EU.
So far brewers in the core western EU countries have covered a large percentage of their malt needs by long-term agreements (LTAs), however most of it with an unpriced barley basis. Estimates of priced LTA's run between 20 and 30%, with exceptions up to 50%. Only max. 20% of fixed price contracts have been concluded for delivery in 2022. Brewers had based their budgets on historical barley markets and now find it very problematic to move out of their short positions.
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