WITH SPRING approaching, longer daylight hours and sowing now started, EU and UK barley markets are still awash with last year’s crop, much of which is good malting quality.

That does still leave many ponderables for those currently putting in spring barley. However, demand is trying to recover following the global recession. Consumption of both beer and whisky is expected to increase, helping barley demand and creating a more balanced supply and demand.

Production across the EU is expected to be lower, but carry-over stocks remain likely to play a key role in EU barley markets for the forseeable future.

For the EU, changes to the intervention system will allow exports to compete but remove further price security. Malt, whisky and beer demand are becoming more globally influenced, thus raising the impact of volatile currencies.

The UK barley balance is similar to those seen across the EU. However, the oversupply is greater due to the substantial increase in spring barley plantings for harvest 2009.

EU malting barley production reached 14.3m tonnes in 2009/10, almost 1m above the previous season’s crop. At the same time, demand fell by almost 1m tonnes to 9.9m tonnes, generating a huge surplus of 4.4m tonnes.

This season, EU malting barley production is expected to be some 2.5m tonnes lower at 11.8m tonnes, compared to last season, with demand maybe 0.7m tonnes higher at 10.6m tonnes.

Those kind of figures would give the lowest malting barley surplus for the past three seasons, at 1.3m tonnes. But then there is the significant carry-over from 2009/10.

The UK’s supply and demand balance sheet, shows a current export and intervention surplus of 1.99m tonnes.

Although, here in Scotland, we are dominated by the distilling sector, Scottish barley pricing is impacted by EU markets to some extent. Some 90% of Scotch whisky sales are to international markets, which have been hit by the global recession.

In 2007, consumption reached 350m litres. This is expected to have fallen to 300m litres in 2009. The main reduction has been seen in North America, with the emerging markets of China and India remaining stable.

In coming years, demand is expected to recover as economies come out of recession. As you can imagine, longer term forecasts are important to the Scottish whisky industry as the spirit has to be stored for a minimum of five years before it can enter the market.

UK beer consumption has also suffered from the recession. In the final quarter of 2009, beer demand totalled 7.5m barrels, some 1m barrels below the same time in 2007. This has caused a backlog of malt in the supply chain, meaning that further malt and barley will have to be carried over in to the new season.