While EU wheat stocks are expected to remain relatively high next season, the outlook for barley looks to be tightening. With the EU barley harvest now well underway, what can we expect from the 2023 crop and what could this mean for 2023 domestic prices?
Olivia Bonser, analyst Cereals and Oilseeds AHDB, says: “Much like the UK, the end of May and the beginning of June saw hot dry weather with minimal rean across parts of Europe. In particular the barley crop in Spain is very poor despite the recent heavy rain which has arrived too late to have any positive effect on yields. In fact the recent rain could well have worsened quality further.
“Denmark, Sweden and the Baltic countries have also been affected by the drought conditions. According to RMI analytics, spring barley crops are particularly vulnerable to the hot and dry weather, and yields need watching as harvest progresses.”
In the Brewing Raw Material Journal last week, RMI analytics pegged EU-27 and UK barley production for the 2023/24 season at 56.0m tonnes. If realised, this would be down 4.7% from the estimated 58.8M tonnes produced in 2022. Largely due to the decreased EU supply outlook and the reduced import opportunities (due to a smaller Ukrainian crop), EU and UK combined barley ending stocks were forecast at 5.2 M tonnes, down 25.7% from the 2022/23 estimate. If realised, this would be significantly below the five-year average. (Stratégie Grains).
Prices tracking wider grains complex
Global barley prices will continue to track the wider grains complex. But, we could see the discount of barley to wheat reduce if the EU barley supply and demand balance is as tight as expected. UK barley exports to the EU have been relatively strong for most of 2022/23, and there is the potential for firm exports in 2023/24 too.
“This will of course depend on how competitive UK barley is on the global market and the size of our domestic crop”, adds Ms Bonser. “In the most recent crop development report, while winter barley was in better condition than at the same point last year, spring barley was rated at 53% good/excellent condition, compared to 77% last season. With the total UK barley area estimated down slightly (2%) and poorer conditions, we might not have as much surplus available for export that we’ve had this season.
“To conclude, the EU barley outlook for the 2023/24 season looks to be tightening, and with harvest progressing, in some areas it is too late for rains to improve quality and yield. As a result, barley prices could see some support, though the overall direction will still be driven by the wider grains complex. UK barley export potential will remain a watchpoint over the next few weeks as we gain more information on our domestic crop.”