France slakes EU brewers' thirst after drought hits barley crop

HAMBURG (Reuters) - A big barley harvest in France has rescued Europe’s beer brewers from supply shortages after parched conditions across the continent this summer ravaged crops elsewhere, traders said on Friday.

FILE PHOTO: Barley crop is seen growing at Manor Farm in Middle Duntisbourne in south west Britain, August 1, 2018. REUTERS/Toby Melville/File Photo

Britain is also helping to relieve supply pressure by bringing forward malting barley exports ahead of possible sales restrictions after Brexit.

But hefty EU imports of malting barley, a key ingredient for beer and malt production, could come from Argentina in 2019 to keep the market supplied.

“France has come to the rescue after the drought and heatwave damaged the barley crop this summer which I estimate left the EU with a malting barley supply deficit of at least 600,000 tonnes,” one German barley trader said.

“Malt producers have also had to compromise on quality.”

One of the hottest summers on record in west Europe coupled with drought cut malting barley crops in regions including Germany, Poland and Scandinavia. Spring barley, planted early in the year, is the favored raw material for malt and beer production. Winter barley, sown in the autumn, is mainly used for animal feed.

“France’s winter barley crop this year had good quality and a lot has malting quality,” one trader said. “Malt producers in several countries have been able to increase use of French winter barley and have made substantial purchases.”

“Winter barley cannot fully replace spring barley but it can provide a temporary answer. The main problem now is low water on the Rhine and other rivers which is making inland waterways transport from France difficult and expensive.”

Good French supplies have cooled German malting barley, prices which are down 20-25 euros from summer peaks.

“France is in pole position this year,” a French broker said. “We have the best barley in Europe and the cheapest.”

Another supplier is Britain, where traditional barley exports to the EU are being brought forward because of uncertainty about whether Britain will have access to the EU market when the country leaves the bloc in March 2019.

“UK exports of malting barley are getting squeezed into a period between now and the end of March to get it out of the country (before Britain leaves the EU),” said Bob King, Commercial Director at Britain’s Crisp Malting Group.

But the supply deficit may spark more imports from outside the EU.

“I anticipate substantial EU purchases of malting barley by the EU in Argentina early in 2019,” another trader said. “I think between 25,000 to 100,000 tonnes could be bought if prices are attractive.”

Reporting by Michael Hogan, Nigel Hunt, Valerie Parent and Sybille de La Hamaide, editing by David Evans