Grain harvest 2021– difficult times for malting barley
The grain harvest in 2021 was marked by disappointing results on the whole in terms of yields and quality, with variations from one region to the next. The high yield expectations in June and July were suddenly let down. Since then the grain prices have skyrocketed. Stephan Bergler, IREKS, provides us with a cause and effect analysis.
Extreme weather conditions, volatile grain markets and rising prices in 2021
For nearly five years global grain production has only barely covered annual consumption. Many of us can remember the similarly weak grain harvest from 2007. In terms of price, the 2021 malting barley harvest easily breaks the record for prices set at that time. Unlike 2007, today’s market is characterized by different framework conditions and significantly stronger international demand. The extremely high price level of the grain market will probably persist for even longer.
Weather, growth and the course of the harvest
All in all, there was a good supply, almost too much supply, of water in 2021.
Heat was not such a problem for the plants this year, with only a few extremely hot days in June in some regions. These hot days, in turn, were not beneficial for the grain quality of the malting barley, but ultimately led to grading problems with low whole grain content.
The damp weather conditions in Germany continued throughout the harvest period, significantly reducing the harvest windows in some regions and often affecting the grain threshing. The very low temperatures during the harvest phase prevented worse things from happening. In other regions, heavy thunderstorms with hail damage led to massive deterioration and even total losses.
Grain and malting barley in Germany in 2021
Germany’s 2021 malting barley harvest was defined by an area reduction of around 18 percent compared to the previous year. The malting barley area fell to a historic low of around 300,000 hectares. The agricultural sector had done so, among other things, in reaction to the lower demand of the breweries and malt houses caused by the coronavirus pandemic. Malting barley was barely able to develop its own momentum due to the subdued demand. The 2020 grain harvest, which was thought to be sufficient in fall 2020, was used up in June 2021, and the 2021 harvest started with almost empty silos.
The extremely dense stocks of grain that could be seen in the run-up to the harvest fed the hope that a high yield could compensate for the decline in area. However, the results fell short of the expectations. A lack of nutrient supply for the many stalks and grains, disease infestation, a few hot days at the end of June and collapsing grain stocks due to the damp harvest weather significantly reduced the actual yields at a regional level.
Grain, including malting barley, is characterized by low specific weight and regionally weak grading. In many cases, moist grains were delivered. Protein does not present a problem in the 2021 harvest. In the late harvest areas, outgrowth became an issue due to the long harvest period. Overall, Germany experienced an exceptionally long harvest period – from the beginning of July to mid-September. The yields were below average. With almost no exception, the grain batches threshed in September were only good for animal feed.
The amount of malting barley produced from the 2021 grain harvest is currently estimated to be between 900,000 and 1 million tons. This is also a historic low and Germany will need to import at least 1 million tons of brewing barley.
Grains and barley in Europe in 2021
The barley harvest in south-east Europe was marked by good results in winter and a poor summer. The total quantity balance evens out; no export volumes are expected.
Compared to the 2020 grain harvest, France also recorded a significant decline in the area of summer malting barley. A good winter barley harvest was put into perspective by a scarce summer barley harvest with quality restrictions in terms of grading and germination. In addition, barley export demand from China is almost exclusively concentrated in France.
In Scandinavia Denmark’s harvest was average. However, given the weak harvest in Sweden and Finland, this cannot fully offset the situation in Europe as had been hoped.
Malting barley supply: tight at best
The entire European supply balance for malting barley from the 2021 grain harvest is extremely tight – at best even. The market faces another risk as it waits to see whether the germination capacity of the qualitatively restricted malting barley batches can be maintained until the coming spring. The balance of malting barley could slip into the negatives and there may be a real supply bottleneck in spring.
Financial funds provide additional fire
The other types of grain, in particular wheat, oil-yielding plants and rapeseed, were also unable to meet harvest expectations. The grains are rushing higher and higher on the MATIF stock exchange in Paris. Wheat and rapeseed prices that were unimaginable a year ago have now become a reality, and there seems to be no limits. In addition to the very tight physical markets, the financial funds are also fueling the situation on the stock exchanges.
2021 grain harvest in the northern hemisphere
Other factors are driving up prices on the international grain markets: Heat waves during the growing season caused poor harvests in the U.S. and Canada. The harvests in Russia, Ukraine and Eastern Europe also fell short of expectations, and there are also export restrictions for grain from Russia. The world grain stocks had to be revised downwards.
A good grain harvest in the southern hemisphere, for example in South Africa, is therefore urgently needed in order not to upset the markets any further and to ensure a worldwide balance.
An outlook for 2022 in terms of grain cultivation
The grain market will be swept along by the situation in 2022
Both the prices on the entire grain market, and especially on the malting barley market for the 2022 harvest, are at an unusual, extremely high level. But considering the price discount for the 2021 harvest, this is a very attractive price situation.
It is a good thing that the malting barley is able to assert itself again against the other wheat grains. Compared to the price structure of the other grain types, however, malting barley cannot stand out significantly. Especially given that, from an agricultural perspective, malting barley cultivation is considerably more risky than that of other types of grain. Experience also shows us that it is always more difficult to recover a lost area than to give an area to other wheat grains.
Uncertain prospects for growing grain
The agricultural area in the EU is steadily declining. Organic grain cultivation is to be increased to a market share of 30 percent – with a lower yield from organic grain cultivation compared to conventional cultivation (around 40 percent). The EU agricultural policy is increasingly restricting plant protection and fertilization – this, too, results in a lower yield. Regardless of whether you consider this path a good one or not – the fact is that, in the long term, these measures will result in a lower yield and thus an inferior harvest volume in the EU. In future, the EU will have an optimally even grain balance and will cease to be a grain exporter.
Special efforts are required for cultivating malting barley
The agriculture sector has a multitude of alternatives for growing malting barley and is only forced to adapt its cultivation plans due to crop rotation or weather conditions. Otherwise, agriculture will choose the most attractively priced route with the lowest risk. This is something malting barley certainly isn’t known for at the moment. Special efforts will therefore be required to bring the cultivation of malting barley back into agriculture; especially if we want to reduce the import quota of brewing barley for Germany. Only by doing so can we again have a more direct influence on the varieties and qualities desired by our breweries. It takes an effort from the stalk to the glass to place the malting barley back where it belongs.
Sources
1. https://www.bmel.de/DE/themen/landwirtschaft/pflanzenbau/ackerbau/ernte2021.html (accessed 11/15/2021)
2. Harvest report 2021 – Federal Ministry of Food and Agriculture https://www.bmel.de/SharedDocs/Downloads/DE/_Landwirtschaft/Pflanzenbau/Ernte-Bericht/ernte-2021.pdf
3. https://www.agrarzeitung.de/markt/markt-news/ernteschaetzung-frankreich-setzt-rotstift-an-97855 (accessed 11/15/2021)
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