Malting barley premiums will stay well below average levels for
now, but could recover later in 2014 as the weak prices encourage a drop in
sowings, with North America seen as a prime target for average reductions.
Evergrain forecast that malting barley premium over feed
barley will trade at E5-15 a tonne for the first part of the year, thanks to the
strong supplies created by "good-to-excellent crop results in all major growing
regions" in the latest harvests.
"The world in 2014 will be oversupplied with malting barley,"
the Swiss-based malting barley trader said, in a price outlook which also
warned of pressure on values of other crops.
"Premiums versus wheat and feed barley will remain low." The
average premium in Europe is about E30 a tonne.
A range of countries, from Canada to Argentina, have enjoyed
strong barley harvests, both in quality and quantity terms, which has depressed
the premium over feed barley, itself undermined by the ample supplies of rival corn.
However, the premium "could improve to E10-30 per tonne" in
the second half of 2014 as the low prices in the first half of the year
encourage lower plantings for the next harvest, Evergrain said.
"We should expect a crop 2014 acreage impact, and a return
to a more balanced supply situation in 2015," the broker said.
Evergrain has forecast a 5% drop in European Union spring plantings
of malting barley varieties, in the main in the UK, where a poor 2012 for autumn
sowings left a far larger-than-usual area unplanted the following spring.
RMI Analytics, the malting barley consultancy, has cautioned
over a fall in area in North America too.
'Potential for an
RMI said: "Early indications are for about a 5-10% drop in
acres in North Dakota," a major barley-growing state, where farmers are
increasingly turning to corn.
In Canada, "early estimates are for a drop of high single
digits for barley plantings".
"When we look at the full North American barley complex, one
can see the potential for an over-correction which could lead to sudden
shortages if there are any yield issues in 2014."
Barley acres in Australia this year "could be down in the
mid-single digits", given low prices, "and the likelihood of farmers carrying
over 2013 barley in the hope of better pricing in 2014".