Base Currency: Euro, EUR on 04-June-2004 1 EUR = 1.2224 USD 1 EUR = 0.6642 GBP 1 EUR = 1.6648 CAD 1 EUR = 1.7728 AUD 1 EUR = 135.38 JPY 1 EUR = 3.8579 BRL 1 EUR = 35.5474 RUB	Base Currency: US Dollar on 04-June-2004 1 USD = 0.8183 EUR 1 USD = 0.5432 GBP 1 USD = 1.3619 CAD 1 USD = 1.4503 AUD 1 USD = 110.76 JPY 1 USD = 3.156 BRL 1 USD = 29.08 RUB
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China: Anheuser-Busch Cos. Inc., the world's biggest beer maker, has won the bidding war for control of China's Harbin Brewery Group Ltd. as rival SABMiller PLC withdrew its competing offer and said it would instead sell its Harbin shares to the maker of Budweiser. SABMiller will sell its 28 % share in Harbin Brewery to Anheuser-Busch for $211 million under its rival's latest offer of 5.58 Hong Kong dollars (72 U.S. cents) a share, London-based SABMiller announced on June 03, 2004. It withdrew its offer for the Chinese company of 4.30 Hong Kong dollars (55 U.S. cents) a share. U.S. giant Anheuser-Busch offered US$720 million or HK$5.58 a share for the Chinese brewer this week, trumping a HK$4.30 per-share hostile bid last month from SABMiller. SABMiller's retreat ends the first takeover fight between foreign firms for a big Chinese company, although the London and Johannesburg-listed brewer does not leave empty-handed. SABMiller, which last year bought 29.4 % of Harbin before their partnership soured, said it would accept Anheuser-Busch's offer for its shares, generating a profit before costs of about US$124 million. Both global companies want a bigger share of China's beer market, which is the world's largest by volume and is growing at a rate of 6% a year. Analysts have said the Budweiser brewer's offer for Harbin, a regional player in China's northeast, is high at about 35 times Harbin's forecast 2004 profits. "It's the wise choice," Herbert Lau, research director at Celestial Asia Securities, said of SABMiller's retreat. "The takeover battle derailed from the underlying fundamentals...more info

Brazil: Brazilian brewer Schincariol filed a request on June 3 asking that rival beer maker AmBev not be allowed to sell beers belonging to Belgium's Interbrew in Brazil until authorities approve Interbrew's planned purchase of AmBev. Schincariol, Brazil's second-largest maker of beer after Companhia de Bebidas das Americas (AmBev), filed the request with the nation's top antitrust authority, the Administrative Council of Economic Defense (CADE), according to Reuters. Schincariol argued that AmBev should not be allowed to distribute Interbrew's brands in Brazil or have access to the Belgium company's funds until the CADE issues a formal ruling on Interbrew's $11 billion takeover of AmBev. Interbrew, the maker of Beck's and Stella Artois, has said it is aiming to complete the AmBev purchase in the third quarter of this year. The deal would create the world's largest maker of beer in terms of volume, surpassing Anheuser-Busch Cos. Inc. . Schincariol has tried to derail the deal, arguing it would hurt Brazil's beverage market, where AmBev is the major player but Interbrew is virtually nonexistent. But Schincariol's efforts have so far failed, and most analysts expect the Interbrew-AmBev deal to get the green light from the CADE without many problems. Last week, the Finance Ministry's SEAE antitrust agency issued a report recommending that the CADE approve the deal.

Scottish & Newcastle Plc, the largest beer maker in the U.K. and France, said on June 04 it had signed a binding legal agreement to buy 19.5 % of China's sixth-largest brewer, Chongqing Brewery Company Ltd. (CBG), for about 35 million pounds ($64 million) in cash. The deal now hinges on approval from the Chinese government and is expected to be completed within a few months. CBG operates 18 breweries primarily in the south-west of China and has a 10-year-old agreement to brew and supply McEwan’s lager to the Chinese market on behalf of S&N. The region is one of the most densely populated in the country and Chongqing, which rises above the banks of the Yangtse river, is one of China's largest cities. Edinburgh-based Scottish & Newcastle, whose Irish operations include the Beamish & Crawford brewery in Cork, first expressed an interest in buying a stake in the Shanghai-listed Chongqing Brewery Company in December and clinched a co-operation deal two months later. Proceeds will be used to fund CBG’s fast-paced acquisition and expansion programme in neighbouring provinces in China. Overseas brewers are scrambling for a slice of the potentially lucrative Chinese beer market which is growing at a compound growth rate of 5% each year. Budweiser owner Anheuser-Busch on June 03 headed off rival SABMiller in the race for the Harbin Brewery Group. Earlier this year, Dutch brewing giant Heineken acquired a 21.6% stake in Guangdong Brewery in southern China through its venture Asia Pacific Breweries. S&N has market leading positions in 14 countries in Europe and Asia, while establishing joint ventures in emerging beer markets such as Russia, Ukraine, Kazakhstan and India.

USA: Anheuser-Busch Cos. Inc. said May 29 it can air its new ads after it won two of three challenges to its advertising by SABMiller in U.S. District Court. The company said the judge allowed A-B to say in its advertising that Miller Brewing was purchased by South African Breweries and that it was South African-owned. However, the company was asked not to say "Miller is owned by South African Breweries." The company recently launched several new radio and television ads that refer to Miller's South African ownership. "While the judge's order does not permit us to say 'Miller is owned by South African Breweries,' we view that as a technicality having to do with the company's legal corporate name," said Francine Katz, vice president of communications and consumer affairs for A-B, in the statement. "That phrase appeared only in a limited number of retail marketing materials and will be easily replaced." Last week, Miller Brewing sued A-B seeking to stop it from using what it said were false statements in its ads. It also claimed A-B's distributors were defacing Miller's packages and promotional materials. way Brewery Holdings Ltd. to better reflect the importance of its biggest brand of beer.

Ukraine: Last year Ukraine exported 159 million litres of beer, 47.2% up versus 2002. Meanwhile Ukraine imported 315 million litres of beer in 2003 a twice increase compared to 2002 figure. The biggest customer of Ukrainian beer is Russia. In 2003 Russians drank 135 million litres of Ukrainian beer. 2-3% of Ukrainian beer market is imported beer. According to official statistics Russia shipped 279 million litres of beer to Ukraine in 2003. Analysts forecast Russian beer deliveries to Ukraine to increase in the future.

Malt News

The IGC (International Grain Council, London) estimates world malt trade in 2003/04 at 4.3 million tonnes, unchanged from a year earlier, although 200,000 tonnes below the level of 2001/02. Largest increases are seen in Southeast Asia. In a study of the Canadian barley market, the U.S. analyst Sparks expects an increase of 2.5 million tonnes malt and malting barley usage in Asia by 2010, 60 % in China and 40 % in other countries. The figure seems more than exaggerated, but it confirms, anyway, the good trend prevailing in that part of the world, analysts commented.

Barley News

Strategie Grains has raised its forecast for the total barley production of the EU-25 in 2004/2005 from 57.3 M tonnes to 58.1 M tonnes (compared to 54.5 M tonnes in 2003/2004). This stems from higher estimates for planted area in the Czech Republic and Poland and improved yield forecasts for Spain and Slovakia, Strategie Grains said. These changes have more than offset a reduction in projected winter barley area in France. Temperatures throughout April were close to the seasonal average across Europe although precipitation levels across the continent were uneven. Rainfall levels were close to the seasonal norm in southern, eastern and northern Europe, higher than average in the UK and lower than average in some parts of Germany (Rhine Valley and the south) and France (Champagne-Ardenne and the east). The return of wet weather at the end of April/beginning of May alleviated concern over inadequate water supplies in these areas and allowed groundwater reserves to swell. Nearly 50 M tonnes are forecast to be harvested in the former EU-15 in 2004/2005 (46.5 M tonnes in 2003/2004) and just 8.5 M tonnes (8 M previously) in the new member states. The expected higher output comes despite an overall decrease in the planted barley area. However, increased sowings of higher yielding winter barley is estimated to more than offset the decline in spring barley plantings compared to last year. In general, barley plantings have, like wheat, returned to a more “normal” planting pattern, after last year’s exceptionally high winter kill saw the majority of the damaged area replanted with spring barley. In Germany, the largest EU barley producer, latest official estimates put the winter barley area at 1.38M ha, some 4 % above last year, while spring barley sowings have returned to 0.6M ha (-18 %). Given the current good crop conditions, an output of more than 12M tonnes sounds reasonable...more info

Australian grain marketer ABB Grain Ltd. cut on June 2 its estimate of returns for collective sales of feed barley grown last crop year, reflecting expectations of a good European crop, according to Dow Jones. The cut of A$8 a metric ton reduces its estimate of returns from its number one pool to a gross range of A$172-A$182/ton, and cuts its estimated returns for its number two pool back to a gross range of A$147-$167 a ton, it said. Michael Iwaniw, the company's managing director, said the decrease reflects international customer views of the new European crop, in comparison with available supplies from Australia, an alternative global supplier. "Customers don't want to purchase a year's supply of grain at one time, and so the large (old) crop produced by Australia was always going to be sold over an extended period," he said in a statement. "With the expectation of a good crop soon to be harvested in Europe, buyers have scaled back their purchases to only service their immediate needs, preferring to run down their already existing stocks," he added. That said, old crop feed barley is good quality and was harvested under good conditions, which should bode well for future sales, he said. With some parts of Australia suffering dry weather, more of the old crop will be used domestically as the need for stockfeed grows, he said. Looking to the local season ahead, the large size of the European crop will put downward pressure on prices, he said. ABB Grain holds an export monopoly over barley produced in South Australia, and accumulates barley and other grains elsewhere, some of which it sells through collective sales pools.

Theoretical malt prices.

* - 70/30 = 70% Average two Rows Spring and 30% Six Rows Winter
** - 50/50 = 50% Average two Rows Spring and 50% Six Rows Winter

Theoretical malt prices for crop 2004 are available online www.e-malt.com/MarketPrices

Malting barley prices. French barley prices.

Graph of the week
Agenda

June 2004:
BrewNZ 2004;
ALIMENTARIA MEXICO International Food and Beverages Exhibition;
Hotelympia;
BEVEX 2004 - Korea Int'l Beverage & Brewery Processing Technology Expo;
10th international symposium on pre-harvest sprouting in cereals;
BevTek / BrewTek;
IGC GRAINS CONFERENCE 2004;
26th Annual National Homebrewers Conference;
Scottish Traditional Beer Festival;
Coceral Congress 2004;
American Homebrewers Association 26th Annual National Homebrewers Conference;
Food Taipei;
The 9th International Barley Genetics Symposium;
Little Oktoberfest;

July 2004:
VI Moscow Beer Festival;
Lucky Baldwin's IPA Festival;
BevTek / BrewTek China;
Vermont Brewers Festival;
World Brewing Congress 2004;
Hop, malt and beer of Russia Exhibition;

August 2004:
Great British Beer Festival;
Worcester Beer and Cider Festival;
BeerTek China Beer and Brewing Technology Exhibition;
Peterborough Beer Festival 2004;
FOODWORLD Food and Beverage Exhibition;

More events are available on site e-malt.com