The jump in sowings of spring barley which UK farmers are gearing up for may not be as negative for prices of malting supplies as might be thought, given cuts in winter crop and a thriving whisky industry.
UK growers will sow some 825,000 hectares with spring barley, the main source of malting grain, this year, a jump of 40% year on year, and the highest area since at least the 1990s, according to RMI Analytics.
Some commentators have forecast an even larger increase in area, given the extent of autumn plantings that waterlogging prompted UK farmers to forego, with the Andersons pegging sowings at potentially 856,000 hectares, and some trade forecasts above 900,000 hectares.
An average yield of more than 5 tonnes per hectare implies production of spring barley – feed and malting combined - well above the recent high of 4.09m tonnes, achieved in 2009.
Nonetheless, this does not necessarily imply squeezed malting barley premiums, RMI's Matthias Wree said, given the potential for counterbalancing declines in supplies.
The soaring spring barley sowings seen in the UK run counter to the trend elsewhere in the European Union, where RMI expects farmers to sow a total of 7.73m hectares, down 3.7% on last year, when a harsh winter forced growers to reseed over frost-damaged winter crops.
Furthermore, supplies of malting barley gleaned from the winter crop are expected to be well below historic levels of 600,000 tonnes, in part thanks to depressed sowings.
Demand is growing too, with the UK farm ministry, Defra, pegging human and industrial use of barley at 1.84m tonnes in 2012-13, up some 200,000 tonnes in three seasons, spurred by growing distillery consumption.
Scotch whisky distillers raised exports by 12% to $4.3bn in the year to June, and are planning £2bn in investment over the next four years, according to industry estimates.
"The malting barley premium has the potential to go up again," Mr Wree told Agrimoney.com.
"The UK does need a high area of spring barley, in part to offset the fall in malting barley from winter crop."
This recovery in premiums, "to healthy levels somewhere between E30.00-35.00 a tonne", looks set to be seen in Continental Europe too.
"The market needs to attract spring barley acreage. We need to see the spread widen to encourage farmers to try for malting barley rather than just settle for feed barley," Mr Wree said.
The jump expected in UK spring barley sowings is at such levels that it has prompted talk of a shortage of seed.
Wynnstay, the UK grain trader and farm retail group, said two weeks ago that its orders for spring seed had reached a record high.
However, Mr Wree also flagged the potential for spring barley area to be overestimated, given that its expansion will require planting in "non-traditional growing regions", which may in teh end plump for alternative crops.