World: Malt contracts negotiations must take into account barley availability as well as cost of energy and transport - analysts

War in Ukraine, lower barley supplies in world markets and sky-high prices. Exploding prices for energy, fertilizer and transport. The threatening gas and oil boycott could even lead to production stops in the malting and the brewing industry. Inflation - EU February 5.9%, Germany March 7.3%. The pandemic continues in spite of vaccinations and restrictions of public life. All these factors - will impact consumption of food and drinks, H. M. Gauger GmbH said in their April report.

Beer sales have not reached the levels of 2019 yet, and prospects are clouded for this calendar year. One example: rather sizeable EU beer exports to Russia have stopped.

Technical procedures: malt quantities that are not lifted during contract periods are cancelled or renegotiated. Valid sales contracts and LTA’s have come under discussion, whether present laws, contract rules and most of all friendly supplier/customer relations allow for price corrections in view of the abnormal rise of energy and transport cost. All new contracts will include clauses of maximum security for contract parties. As barley of old crop is unavailable and new crop barley unoffered, malt cannot be offered freely as in past years, the analysts said.

Negotiations must take into account barley availability and prices as well as the cost of energy and transport. In domestic EU markets brewers are hesitant or unwilling yet to cover their malt needs for 2023. There is still occasional demand for old crop malt, which is priced above €700,- exw, if available. Brewers show interest in Sept/Oct positions. It had always been suspected the old crop malt cover of brewers was not sufficient, and it may turn out difficult to cover the in-between-crops positions. African and Asian brewers are inquiring offers for the second half of 2022 and do not find sellers easily. After all, purchases of Ukrainian malt must be replaced and new supplies are unavailable. Canada and the U.S. are non-suppliers until the availability of new cop malt. China is uncompetitive.

Altogether there is an obvious lack of malting capacity, even though many presently unable maltsters will return to the market next year. World population, beer consumption (slow) and beer quality (larger malt input) are rising, and the world malt capacity was already insufficient in 2019, before the start of the corona pandemic. Meantime maltsters will carefully protect their malting margins, H. M. Gauger GmbH forecast.

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