Brewers blasé about malting barley supply

Quality malting barley is difficult to find but rather than crying 
in their beer, some buyers are turning to lower quality crop

The western Canadian malting barley market has given nothing for farmers to smile about over the Christmas holidays.

Instead of a hoped-for rally, the present weakness has reinforced worries that Canada’s crop no longer matters much in the global malting market.

“It’s just kind of blah,” said Neil Townsend, chief analyst at FarmLink Marketing.

“There has been no panic from the buyers’ side at all.”

Farmers had hoped quality damage from bad 2016 growing conditions and a tough harvest would worry buyers of Canada’s top-quality malting barley crop and lead to a post-harvest rally.

For some reason, even though many crops were indeed damaged by the horrendous harvest that many farmers faced, barley maltsters and exporters have not moved to fill their bins and terminals.

“They haven’t noticeably taken any more coverage,” said Townsend.

“They haven’t been treating good quality barley like it’s a rare commodity. They’ve been hand to mouth, and they’ve been rejecting a lot of barley.”

Mike Krueger sees the same thing south of the border.

“I don’t know if it’s not going to happen or if it’s just a patience game,” said Krueger, who operates the Money Farm in Fargo, North Dakota.

U.S. barley crops generally appear less damaged than Canadian crops, which has alleviated some buyer worries. As well, the growth of an overseas competitor has also limited the potential for a rally.

Townsend said Australia’s record crop is in head to head competition with Canada in the Chinese market and can easily capture market share.

Brewers want Canada’s traditionally high-quality malting barley, but some are willing to deal with lower quality barley like that in Australia’s Fair Average Quality class.

“There’s a big market for Australian barley,” said Townsend, especially for people who have not traditionally drunk beer and who don’t know how it is supposed to taste.

Another challenge to Canada’s traditional overseas markets is the emergence of Russia and Ukraine as competitors.

“It’s not just Canada and Australia now,” said Townsend.

“It’s other origins working in there, too.”

Krueger said many farmers had their production covered by contracts signed many months ago. Those farmers’ attention has switched to new crop offers.

“The big question with farmers is what kind of contract price will the malting barley people come out with this winter,” he said.

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