A year ago malt for the crop of 2006 was sold at levels of EUR 230,-/240,-, leaving malting margins of EUR 50,-/60,-, sometimes less, against the market prices of malting barley before the harvest, market analysts commented. According to them, the catastrophic barley crop catapulted barley prices to the level of the former malt sales.

One must stress the fact once more: if maltsters cover bad malt sales now, they book losses of EUR 150,-/200, - per ton, on basis of a production cost of about EUR 100, - per ton. It looks as if most maltsters have learnt their lessons; they know that there is at least a balance of supply and demand, maybe even a short of malt also for the next crop year. They need a malting margin well above EUR 100,- in view of the risen cost of energy, transport etc. And they must and will do the malt sale/barley purchase operation on a back to back basis to avoid the risk of major price changes in the barley markets.

Present malt markets for 2rs malt are EUR 435,-/445,- for prompt delivery, FOB seaport, if at all available, and EUR 365,-/375,- for new crop malt, shipment October/December of this year. Contracts for domestic business, delivery in 2008, franco breweries, have been concluded in the range of EUR 365,/380,- per ton.

For 2006-07, Canada barley exports are forecast by Agriculture and Agri-Food Canada (AAFC) to decrease significantly due to lower exports of feed barley. Carry-out stocks are forecast to decrease to the second lowest in recent history. Off-Board feed barley prices are expected to average significantly higher than 2005-06, due to high corn prices in the US and low supplies of barley in Canada, AAFC stated in its Grains And Oilseeds Outlook on February 6, 2007.

For 2007-08, barley production is forecast to increase by 21% due to higher area seeded and yields. Total supply is also forecast to rise sharply. Exports are expected to increase slightly, while feed use remains similar to 2006-07. Carry-out stocks are expected to increase. The average off-Board feed barley price is forecast to fall by 10%, as the pressure from higher domestic and global barley production more than offsets the support from higher corn prices. For similar reasons, CWB pool returns are forecast by AAFC to decline, particularly for two-row designated barley.

According to market analysts, French two-row spring barley, variety Scarlett, had been quoted down to EUR 215,-, July, FOB Creil, in recent weeks, but has gone back up to 220, - . The parity FOB Moselle demands a premium of min. EUR 10,-. Six-row winter barley, variety Esterel, had been quoted at EUR 195,-FOB Moselle, but has traded now at an equivalent level of EUR 200,-.

New crop 2rs at EUR 165,- FOB Creil and 177,- FOB Moselle have also gained EUR 4,- to 5,- from their lowest levels. The Danish market has not yet reacted to the firmer trend, old crop 2rs is quoted EUR 224,- FOB seaport, February/March shipment, new crop for October at 175,-. Tight supplies are most obvious in Germany, February delivery traded at EUR 245, - franco malthouse, and there are no offers for deferred positions.

According to market analysts stating on February 2, 2007, it is estimated that French farmers already sold 30 - 40 % of their expected malting barley production of 2007, and an equally large amount is bound by frame contracts with a later price fixation.

In the UK forward sales seem to be no more than 50 – 75,000 tons, in Denmark 100 – 150,000 tons.

German farmers, who are offered around EUR 160, - for pre-contracts, shy away from selling new crop barley, they find the offered prices not attractive enough.