An official from the German Maltsters Association said the penury of good quality malting barley reflected itself badly upon the maltsters’ activity. Malt producers were in talks with brewers trying to convince them to accept malt of feed barley origin which is surely of a less quality.

The malting barley is presently quoted €/t180-200 for a delivery in October/December. Export operators must increase their imports of spring barley and malt from France and Denmark.

Analysts said October 31st that there is a great apprehension that the acreage of malting barley will shrink further in the EU, mostly in Germany, but also in France and Scandinavia.

The autumn planting weather was excellent, reports say that wheat and rapeseed acres have been expanded everywhere. Competition from bio-energy plants is the greatest threat to spring barley. The only hope is that farmers will be attracted by this year's price levels of malting barley. In Germany farmers representatives have stated that farmers must be paid €130,- to 150,- ex farm, and such level must be guaranteed for a longer period than one year. New crop markets in France reflect the German price pattern exactly. The result will be malt prices somewhere between €300,- to 400,- per ton ex works, for which brewers must prepare.

Experts pointed out October 31st that 2006/07 MY is a year of extremes: barley crop failures in the EU and Australia, an apparent capacity shortage of the world's malting industry, record beer sales in most (beer-drinking) countries. North American and Australian maltsters are virtually sold out. South American malt is almost sold out and anyway insufficient for the Continent's needs.

In Europe - EU, Russia and Ukraine - surprisingly many maltsters have sold out their capacities, others are blocked by insufficient barley supplies. In some cases maltsters offer their capacities at a fixed margin, but leave the risk of the barley cost to their buyers. The possibility of a malt shortage is in the air.

The price development of malting barley since the harvest presents an enormous financial stress to the malting industry, probably never experienced before. As maltsters and brewers have covered their needs only for the shortest possible period and crop 2007 barley prices are already very firm, there is very hard to forecast a relief for barley and malt markets for next year.

Referring to the EU difficult barley crops and markets, experts stressed out October 31st that there are three possibilities to ration barley supplies to malting companies:

a) higher prices,
b) usage of lower quality barley and
c) a lower malt production.

The market trend to-date indicates that many maltsters and/or brewers have insisted on high quality barley deliveries and have therefore driven up market prices.

The lower quality sector shows a number of limitations: malting barley with handicaps of protein, screenings, germination and pregermination has become very expensive as well, and is not readily available anyway.

First test results of malted feed barley show a poor malt quality, as had to be expected. Therefore the risk of a lesser malt production and a malt short next spring remains a strong possibility.