A warm and dry finish to the grain growing season has lowered the quality of Australia's barley crop.
On average Australia grows eight million tonnes of barley. It is the second-largest crop in the nation after wheat.
Barley is graded according to its quality: malt is the premium grade, feed the lowest.
Western Australia is the nation's biggest malt barley grower.
Trevor Lucas is the head of trading for WA's main grain handler and marketer, the CBH Group.
He said he was expecting WA to produce about three million tonnes of barley this year, but it had been affected by a hot and dry September and October.
"We are seeing very high screenings in barley. At this time in the harvest we would expect 30 to 40 per cent making malt, but at the moment we're tracking between 10 to 20 per cent, so down significantly on previous years," Mr Lucas said.
Amount of premium malt grade barley below average
While the tonnes for this year's national barley harvest will remain around average levels, the expected amount of premium malt grade barley is below average.
Barley Australia's Andrew Gee said two million tonnes of barley usually achieved malt grade, but this year he was expecting about 1.8 million tonnes.
"South Australia has suffered from the very warm October that we had, as did the barley growing areas of Victoria," Mr Gee said.
"New South Wales isn't too bad, and Queensland, for the little barley that it grows, which is usually feed barley, hasn't been that affected, and I guess we're waiting to see the impact of the rains up there.
"Screenings will be up in Western Australia, in South Australia and in Victoria. The test weights will be down and the grain screenings will be up."
Oversupply of malt barley on global market
Unfortunately for farmers in Australia, a less than average national malting barley crop has not resulted in a significant price increase for malt grade.
But Mr Lucas said the spread for malt was increasing.
"In typical years when retention rates were this low you would see probably more aggressive pricing at this stage, but globally there is an oversupply of malt barley," he said.
"The French for example, they had a huge crop this year and they are going to be keeping a check on the premiums that Australian growers receive for their malt.
"But that said, if things continue to come in at these sort of levels, I do think malt barley will correct, and we've seen that over the past few weeks."
Malt grade barley is used to make malt, a key ingredient in beer. China imports about 80 per cent of its malt barley requirements from Australia.
Brewers within Australia buy on average just under one million tonnes of malt barley each year.
Mr Gee did not think the below average malt barley crop would impact beer prices.
"I think the beer price is dependant on many more things other than the price of malt. Malt is actually a very small component of production in beer, even though it is what beer is all about," he said.
Source - http://www.abc.net.au
