The problem is, those premiums don’t come easily.

Shawn Pasieczka, a food safety grain specialist with Richardson, is the arbiter of what makes the cut and what doesn’t, and ultimately whether a farmer is sitting on $1 million of malt barley or $600,000 of feed. He recently explained the factors influencing barley selection to a group of farmers at the Canadian Malt Barley Technical Centre’s (CMBTC) Producer Malt Academy, held in Winnipeg.

Accurate samples

Pasieczka emphasized the most important step a farmer can take is ensuring the submitted sample accurately represents the entire crop.

“We need to know what that whole field looks like,” he says. “I’m looking at one kilogram to make a million-dollar deal, so that sample you give me better be what you’re actually going to deliver.”

Also, if the grain sits for an extended period, it can degrade, so he cautions farmers to re-sample the bin every six to eight weeks. If a sample meets the specifications in late summer but a load’s not delivered until the following spring, a lot can go wrong.

“Somewhere along the way, it heated, got bugs in it, or the germ dropped off,” he says. “We want to see that so we know for ourselves that you still have the malt that you said you had for us.”

Storage and handling

When storing grain, obviously you want to keep it dry. Once it gets wet, there is a risk of heating.

“The No. 1 thing when you harvest malt is to cool it down as quickly as you possibly can,” Pasieczka says. “If you can, we always recommend putting your malt on aeration.”

More generally, he says, it’s important to ensure the grain is protected from the elements.

“If you’ve got risk of any kind; if there’s spoilage, if bugs are getting in there, if we see anything like that, you’re going to be rejected,” Pasieczka warned. “If you tell me you’ve got a pile of barley in the field, it’s not malt; it’s feed. You’re going to have rabbits and goats and everything in there. Malt can’t have any excreta in it.”

Varietal purity

Different varieties will malt differently and produce different enzymes, so brewers demand variety purity, to ensure consistency for their products.

Richardson requests a minimum of 95 per cent purity — and tests for it, Pasieczka says.

“We will do a little bit of blending. So if you’re off by one or two per cent we’ll blend if we can, but anything lower than 92 per cent we’re automatically rejecting,” he says. “This is because we are selling it with a guarantee. The end users are saying we must have 95 per cent pure.”

While it is possible to re-grow your own seed, Pasieczka notes some companies require certified seed. Richardson doesn’t require certified seed, and neither do other big grain companies such as Viterra and Cargill — but for growers who use their own seed, he suggests retesting to ensure the purity is still there.

Germination

Germination is a critical part of the malting process because it activates enzymes that convert starches into fermentable sugars, which are crucial for fermentation and flavour development.

A simple test is done to determine whether a sample is viable. In a lab, 100 seeds are placed in a petri dish with four millilitres of water and kept at a constant temperature and high humidity. After three days, the germinated seeds are counted, and the number of seeds that germinate determines the viability of the sample.

Pasieczka says they test every sample that comes in, and anything lower than 95 per cent will likely be rejected. He warns this number can degrade over time.

“If you show me a sample in August at 95 per cent, you had better be hauling that in tomorrow, because it’s already dying,” he says. “By Christmas, it’s going to be 92, and by May, it’s going to be 90. It’s never going to come back to life.”

Protein

Protein in malting barley plays an important role in brewing because it supports enzyme production, flavour development and foam stability.

“If you have low protein, you don’t have enough nutrients to keep your yeast alive,” Pasieczka explains. “If you have high protein, you’re getting into issues with haze.”

Haze is caused by the presence of insoluble particles, affecting the beer’s clarity.

Pasieczka says the ideal range for protein is 10 to 12 per cent for domestic markets and 12-13.5 per cent for export markets.

“When we export to China, they’re blending it with a lot of Australian barley, which is typically down into like the nines and 10s. So they’re throwing the two together.”

While varietal genetics can play a role in protein levels, Pasieczka notes environmental factors have a much bigger impact on protein levels.

“If the barley is struggling, it’s going to tend to have higher protein,” he explains. “If you dump a pile of fertilizer on it and there’s not enough moisture to grow a proper crop, it’s going to turn that fertilizer into protein.”

Plumpness

Plumpness is important for malting barley because larger, fuller kernels typically contain more starch, which leads to higher malt extract yield and more efficient malting.

Pasieczka says the expectation for plumpness is 85 per cent. That number is determined by passing the grain through a standardized sieve. The grade is determined as a percentage of grain that either does not pass through the sieve or is lodged in the holes.

As with protein levels, genetics take a back seat to environment.

“This is something that, as a producer, you can’t control. If you didn’t get rain, you’re probably not going to have very plump barley,” said Pasieczka. “There’s a little bit of genetics involved. Some varieties definitely are plumper than others, but it’s a Mother Nature thing. There’s not much you can do about it.”

Moisture

Moisture content is crucial when selecting malting barley because too much moisture can promote mould growth and spoilage, while too little moisture can hinder germination and enzyme activation.

Pasieczka says the industry expects moisture levels in the 10-13.5 per cent range, because end users store grain in 5,000-tonne silos and want it dry before they get it, so it doesn’t spoil.

“A lot of guys don’t harvest at 13.5. They’re harvesting a little bit higher than that, just so the kernel is not as brittle coming up,” he says. “Grain that is too dry will result in more peeled and broken kernels.”

Peeled and broken kernels are a concern because they absorb moisture more quickly. The germ may still grow, but it could grow faster than everything else.

It’s fairly easy to bring 15-16 per cent moisture down to 13.5 per cent, he says, but advises that if it’s harvested much higher than that, the grower definitely needs to dry it.

“You don’t want to dry barley. It is very, very tricky to dry,” he warns. “If you overdry your barley, you’re killing the germ. Once you kill that germ, you’ve got feed barley.”

Chitting

Chitted barley has begun germinating prematurely, which can interfere with the controlled malting process.

Chitting happens when barley in the field matures and is ready to combine but then experiences a couple of days of heavy moisture. Pasieczka says Richardson will tolerate a certain level of chitting.

“We’re looking at maybe two per cent, depending on the germ,” he said. “But that two per cent is not locked in.”

Disease and herbicides

Staining is an indication of fungal loads or moulds in your crop, such as blight. Pasieczka says it’s usually not a big issue, but it causes the hull to get very thick and woody, so it absorbs moisture differently, which could lead to different germination rates. In years where the disease load is high, samples could be rejected based on staining alone.

However, a fusarium infection that produces detectable levels of DON (deoxynivalenol) raises a red flag for malt buyers. When you open a beer and it overflows slowly (not explosively, like when a beer is shaken), it is often because the beer contains DON. Barley will be rejected if DON is detected at levels above 0.5 ppm.

Ergot is another toxin that could cause barley to be rejected. China, the destination for a large portion of the barley Richardson buys, has extremely low tolerance for ergot.

“It’s not an every-year thing, and it’s usually pocketed,” Pasieczka says. “This year was very good for ergot, but two years ago, we had it everywhere.”

Glyphosate

There is essentially zero tolerance for residual glyphosate in malting barley.

“There is no pre-harvest burndown allowed, and we do test for it,” Pasieczka says. “It’s in your contracts when you sign them. There is no tolerance for glyphosate use at all.”

Every year is different

There is no single factor that is the source for the bulk of rejections of malt barley, Pasieczka says, but certain environmental conditions mean certain problems rise to the top.

“Last year we had a lot of rain at harvest. So we had a monster amount of chitting,” he says. “This year, we had no moisture in pretty much all of July. So this year we had very thin kernels.”

Ultimately, to secure the premiums malt barley can offer — now roughly $1.25 per bushel, he says — a farmer has to take control over the things within their power and otherwise hope for good luck.

The post Critical factors in growing malting barley appeared first on Grainews.

The A$5 per share offer represents a 45.3 per cent premium to United Malt’s last close of A$3.44. Trading in shares of the company was halted on Monday.

InVivo, which acquired agribusiness peer Soufflet last year, has said it aims to become the world’s top malt producer within five years through external growth.

Earlier this year, it signed an agreement to take over Belgian malthouse Castle Malting, one of the oldest producers of the beer ingredient in the world.

Malteries Soufflet is the largest commercial maltster in Europe and the second largest globally.

United Malt disclosed it first received an offer of A$4.15 per share in December, followed by several others from the French firm. The latest proposal was made on March 14.

The company has granted Soufflet exclusive access to conduct a due diligence.

United Malt is the world’s fourth largest commercial maltster, producing bulk malt for brewers, craft brewers, distillers and food companies. The company has processing plants in Canada, the U.S., Australia and the United Kingdom.

United Malt’s Canadian assets are under the purview of Calgary-based Canada Malting, which produces about 400,000 tonnes of malt per year.

Canada Malting’s business includes malting plants at Calgary, Montreal and Thunder Bay, nine country elevators across the three Prairie provinces, and Country Malt facilities at Delta, B.C., Brampton and Calgary. The Country Malt packaging plant in Calgary was set up at the Canada Malting plant site in 2019.

United Malt was acquired by Australia’s GrainCorp in 2009 and spun off in 2020. GrainCorp retains an 8.5 per cent stake in the firm, while investment firm Tanarra Capital is United Malt’s largest shareholder.

Neither of the companies immediately responded to Reuters requests for comment on the offer.

— Reporting for Reuters by Harish Sridharan in Bangalore.

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Carlsberg Group on Wednesday announced an all-cash deal worth $4 per share for all shares of Waterloo Brewing, which bills itself as the largest Canadian-owned brewery in Ontario and a pioneer of the current “craft brewing renaissance” in Canada.

The deal still requires court approval — and approval from TSX-traded Waterloo’s shareholders, although Carlsberg has already signed up Waterloo company directors and officers holding a combined stake of about 39 per cent, with “irrevocable” support and voting agreements.

A committee of Waterloo independent directors is also recommending the remaining shareholders vote in favour of the deal, on which the two companies expect to close early in the first half of the new year.

In business since 1984, starting as Brick Brewing and rebranding in 2019, Waterloo Brewing produces the Waterloo line of premium craft beers and a “value” brand, Laker.

It also holds the Canadian rights to Seagram Coolers and the LandShark and Margaritaville beverage lines, and already has been producing Somersby cider in Canada on Copenhagen-based Carlsberg’s behalf since 2020.

“One of the priorities of our SAIL’27 strategy is to grow our business in attractive markets where we are small today, such as Canada,” Carlsberg CEO Cees ‘t Hart said in a separate release Thursday. Buying Waterloo Brewing, he said, “significantly improves our growth prospects in the Canadian market.”

“This exciting opportunity will scale our business in Canada. The brand portfolios are complementary. Local sourcing will secure long-term robustness of supply, and increase commercial flexibility and speed to market for innovations, step-changing the way we operate,” Carlsberg Canada managing director Anders Rud Jørgensen said in the same release.

Waterloo Brewing’s portfolio of “long-standing co-packing relationships will benefit from these combined operations,” he added.

“We’ve enjoyed a close relationship with Carlsberg and are excited about becoming part of one of the largest brewing companies in the world,” Waterloo Brewing CEO George Croft said in Wednesday’s release, adding the the board “is confident that joining Carlsberg is the best long-term solution for our employees, partners, customers, consumers and community.”

Waterloo on Wednesday also announced results for its third quarter ending Oct. 30, reporting declines in both net revenue and gross profit in what Croft described in a separate release as “a challenging year for the industry.”

Waterloo said it’s “continuing to see consumers trade-down as a result of ongoing inflationary pressures,” which has led to sales growth for the Laker brand but has “negatively impacted the company’s premium beer brands and ready-to-drink products, which is putting pressure on gross margin.”

Waterloo has since raised the price on its single-serve 473-millilitre Laker cans, a change it said is “consistent with the balance of the industry and will have a significant and positive impact on gross margin in the fourth quarter.”

The company also reported renewals with “strategic” co-manufacturing partners, which it said will result in about $18 million of combined revenue over the extended terms of those contracts.

For its last full fiscal year ending Jan. 31, 2022, Waterloo had booked $5.803 million in net income on $180.825 million in gross revenue, up from $3 million on $156.8 million in the previous fiscal year. — Glacier FarmMedia Network

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Peter Watts, managing director of the Canadian Malting Barley Technical Centre in Winnipeg, said rising demand from China is also raising prices for feed barley, urging growers to sell their crop and deplete domestic supply.

“They’re emptying their bins and prices have remained really strong,” he said, adding that carry-out stocks will be “very low” this year.

He added that 500,000 tonnes of new crop have already been slated for export to China this year. Domestic supply has already been reduced so much that high-quality malting barley has found its way to feed channels.

“In a year like this, (the barley) may be malt quality but the prices are so strong that producers have decided to take the cash and sell their malting barley into the feed sector,” Watts said. “It’s too bad to lose that good-quality malting barley, but if the livestock industry’s willing to pay for it, that’s where producers are going to sell it.”

In Agriculture and Agri-Food Canada’s latest forecast from January, seeded area for Canadian barley is expected to decrease seven per cent to about 7.17 million acres in 2021-22, citing competition from oilseeds. Meanwhile, production would decline by 12 per cent to 9.5 million tonnes.

Watts disagrees with that assessment. “We could see a five to 10 per cent increase in seeded area,” he predicted.

“I think producers will respond by seeding more barley this year, given the good prices. Assuming an average yield, we might see a bump in production next year.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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During their general meeting Monday in Sydney, participating shareholders in GrainCorp voted over 99 per cent in favour of resolutions which will see the company’s malt business become a standalone ASX-listed company, named United Malt Group Ltd.

Pending court approval of the “demerger,” which is expected at a hearing Friday in Australia’s Federal Court, United Malt will become “the world’s fourth largest independent commercial maltster,” GrainCorp said.

If court approval is granted as expected, shares in United Malt (ASX:UMG) would begin trading March 24 on a deferred settlement basis, then on a normal settlement basis starting April 2.

United Malt’s holdings are to include malting houses in the U.S., Canada, Australia and the U.K., as well as Country Malt Group, the company’s North American craft malt distribution business.

GrainCorp chairman Graham Bradley, speaking to the meeting Monday, said the United Malt business holds “strong market shares in these countries in the growing craft brewing and Scotch whisky sectors.”

United Malt’s Canadian assets are under the purview of Calgary-based Canada Malting, which produces about 400,000 tonnes of malt per year.

Canada Malting’s business includes malting plants at Calgary, Montreal and Thunder Bay, nine country elevators across the three Prairie provinces, and the Country Malt facilities at Delta, B.C., Didsbury, Alta. and Brampton, Ont.

Canada Malting’s history dates back to 1902, when it formed in the merger of three Ontario malting companies. GrainCorp bought the business in its 2009 takeover of the Canadian firm’s then-parent.

GrainCorp first announced its demerger proposal in April last year. Bradley reiterated Monday the deal “has the potential to unlock significant value for shareholders.”

GrainCorp’s board believes the “full value” of the malt business “has not been fully recognized by investors in recent years as it has formed part of a broader group whose business is affected by the variability of weather and crop cycles” along Australia’s east coast, he said.

Eligible GrainCorp shareholders will get one United Malt Group share for each GrainCorp share they hold as of March 25 this year. They’ll also retain their GrainCorp shares and can then opt to keep or sell either or both, the company said.

GrainCorp itself will also hang onto a 10 per cent stake in United Malt Group, Bradley said, “not as a strategic investment but as a valuable liquid non-core asset to provide GrainCorp with additional balance sheet resources and financing flexibility.”

‘Ongoing investment’

GrainCorp said last April its post-demerger focus will be on” building and developing its global grain and oilseeds origination network, including through ongoing investment in the GrainsConnect Canada supply chain and growth into new markets in the Black Sea and Indian subcontinent.”

Calgary-based grain handler GrainsConnect Canada — a joint venture between GrainCorp and Japan’s Zen-Noh Grain — today operates four Prairie inland grain terminals, two each in Saskatchewan and Alberta.

In a separate joint venture, GrainsConnect and Winnipeg grain firm Parrish and Heimbecker are building Fraser Grain Terminal, a Vancouver export facility expected to handle up to four million tonnes of grains, oilseeds, pulses and other commodities per year. Construction is expected to be complete in December this year.

GrainCorp last spring said its plan calls for GrainsConnect to “expand (its) origination footprint in Canada and enable (a) multi-origin service offering to customers in Asia and MENA,” referring to the Middle East and North Africa.

The post-demerger GrainCorp “will be initially structured with low core debt,” thanks mainly to the recent sale of its Australian Bulk Liquid Terminals business, Bradley said Monday.

GrainCorp’s earnings and cash flow, he said, will still be “variable from year-to-year based on weather and crop cycles.”

But the company this year also set up a new 10-year crop production contract, which for a “modest annual premium” will provide payment of up to A$80 million in “very poor crop years.” — Glacier FarmMedia Network

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Peter Watts, the CMBTC’s managing director, understands the frustration. “We continue to work very hard at introducing new varieties into the system to get them commercialized,” he said. “The good news is that we’re having success in getting new varieties accepted by the domestic and global malting and brewing industry.”

In the 2017-2018 season, China emerged as the largest buyer of Canadian malting barley, purchasing 1.4 million tonnes and accounting for 85 to 90 per cent of total malting barley exports. Prior to that, the largest buyer was always the Canadian malting industry, said Watts.

Domestically, new variety acceptance by the major brewers has been slow too, though Watts doesn’t blame the brewers.

“It’s our responsibility as an industry to make sure that we’re promoting the new varieties to the end users and getting information and samples to them,” he said.

To encourage buyers to choose new varieties, CMBTC manages pilot-scale malting and brewing trials of new varieties and provides quality and performance results to end users.

“With respect to uptake of new varieties, it is important to remember that historically and currently, the Canadian malting companies have always played a critical role,” said Watts. “They are contracting new varieties each year with producers and testing them internally for quality and suitability for the customers. And they conduct trials with their brewer customers with the new varieties to get them accepted.”

Back at the farm

At the grower level, the shift to new varieties isn’t as apparent, or at least not as quick. Saskatchewan malting barley producer and craft maltster Matt Enns believes the industry has a long way to go.

“My insular Western Canadian opinion is that new varieties have a huge uphill battle in terms of acceptance,” he said. “The predominance of Copeland and Metcalfe speaks to that.”

Combined, CDC Copeland and AC Metcalfe made up 78 per cent of production in 2016, Enns said, but agreed that Synergy has gained some market share.

“I do have the perception that China is more willing to try different varieties,” he said. “However, if the big maltsters are already malting Copeland and Metcalfe, they don’t really feel like switching out to a different variety if they don’t have to.”

Saskatchewan grain grower and SaskBarley chair Jason Skotheim agrees, adding that a coordinated effort will be needed to push acceptance.

“What we want to see at SaskBarley is that we don’t go into another 20 or 25-year cycle because that’s only five varieties in a century,” he said. “What we want to see is possibly a five- to seven-year span of a variety, and at any given time three new varieties — one that’s tailing off, one that’s peaking and one that’s growing.”

Coordinated efforts are underway currently. The CMBTC, along with the Brewing and Malting Barley Research Institute (BMBRI), is working to develop an integrated approach to new variety acceptance. Watts said it will be implemented as early as next year.

The BMBRI participates in the facilitation and coordination of the Collaborative Test sites. “The Collaborative Test site data is a critical part of the testing of new lines being considered for registration and ensures these new lines meet the requirements of the industry,” said executive director Gina Feist.

“Post-registration, BMBRI members perform plant-scale testing to gain an understanding of the new varieties’ performance in the malthouse and brewery, and how the new varieties will fit each member’s needs.”

All of these efforts make for a “good news” story, but more needs to be done. “In the past few years the Canadian industry has been more co-ordinated and focused in the area of promoting new variety acceptance,” said Watt. “We are definitely not there yet, and all of us who are in the industry know we have a long way to go.”

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GrainCorp stock dropped 11 per cent at the open of trade on Tuesday to hit close to where it stood preceding the bid, before recouping some of those losses to trade at $8.18 (all figures A$). The broader market opened half a percentage point higher.

The little-known asset manager had made an offer of $10.42 per share in December 2018, as drought wilted crops across Australia’s east coast and limited GrainCorp’s ability to earn revenue from international grain trading.

“Had due diligence supported our operational assumptions, we are confident we would have turned the LTAP proposal into a binding offer as contemplated,” LTAP chairman Tony Shepherd said in a separate release late Monday.

Investor attention will now turn to the current growing season, which is predicted to be poor, said Belinda Moore, an analyst at Brisbane stockbroker Morgans.

“LTAP’s withdrawal raises concerns about the due diligence process and GNC’s outlook,” she wrote in a note to clients.

“Before LTAP’s proposal, GNC’s share price was $7.30. Since this time, its outlook has deteriorated further and the company now looks likely to report a loss in FY20.”

Lack of information on the offer had held back GrainCorp from recommending the deal to its shareholders in December.

GrainCorp is in the process of splitting the company into two businesses — with plans to spin off and list its global malting unit — and restructuring its grain business.

GrainCorp’s Canadian assets include Canada Malting, which would join the planned malting spinoff, dubbed MaltCo.

GrainCorp is also a joint venture stakeholder in Calgary-based Prairie grain handler GrainsConnect Canada, with Japan’s Zen-Noh Grain.

GrainsConnect, in turn, is also a j.v. partner in Fraser Grain Terminal, a new Vancouver port facility, with Winnipeg grain firm Parrish and Heimbecker.

Last month, Sydney-based GrainCorp had said it was engaging with suitors vying for parts or all of the company, including LTAP.

The Australian government had blocked a $2.8 billion takeover of GrainCorp by U.S. agribusiness giant ADM in 2013 following pressure from grain growers.

— Reporting for Reuters by Tom Westbrook in Sydney and Aditya Soni in Bangalore. Includes files from Glacier FarmMedia Network staff.

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Sydney-based GrainCorp announced Thursday it plans to “demerge” its global malting business from its grains and edible oils business, forming two separate ASX-listed companies: MaltCo and “New GrainCorp.”

GrainCorp shareholders would get MaltCo shares proportionate to their stakes in GrainCorp if the company completes the demerger as expected by the end of calendar 2019.

GrainCorp said it expects annual savings of about $10 million by integrating New GrainCorp’s grains and edible oils businesses, cutting out duplication of costs and corporate functions, plus $10 million in “business simplification initiatives” coming out of the separation of MaltCo (all figures A$).

MaltCo, the company said, would be the world’s fourth largest independent maltster, operating malting houses in the U.S., Canada, Australia and the U.K., as well as Country Malt Group, the company’s North American craft malt distribution business.

MaltCo, GrainCorp said, would have the benefit of “high-quality, low-operating-cost processing assets strategically located in premium barley-growing regions.”

In Canada, those assets are under the purview of Calgary-based Canada Malting, which produces about 400,000 tonnes of malt per year.

The Canadian assets include malting plants at Calgary, Montreal and Thunder Bay, nine country elevators across the three Prairie provinces, and the Country Malt facilities at Delta, B.C., Didsbury, Alta. and Brampton, Ont.

Canada Malting’s history dates back to 1902, when it formed in the merger of three Ontario malting companies. GrainCorp in 2009 bought Canada Malting in a takeover of its then-parent, United Malt Holdings.

MaltCo, which in fiscal 2018 yielded EBITDA (earnings before interest, taxes, depreciation and amortization) of $170 million, is to focus on “further developing its international portfolio.”

Specialty malt, whisky and craft beer markets “are experiencing substantial growth,” GrainCorp said Thursday, and MaltCo will have “sufficient balance sheet flexibility to support the capital investment required to capture these growth opportunities.”

‘Ongoing investment’

New GrainCorp, after the demerger, would be an “integrated global agribusiness with grain handling, storage, trading and processing operations in Australia, New Zealand, North America, Asia, Europe and Ukraine, focused on grains, oilseeds, pulses, edible oils and feeds.”

GrainCorp said New GrainCorp’s strategic focus will be on” building and developing its global grain and oilseeds origination network, including through ongoing investment in the GrainsConnect Canada supply chain and growth into new markets in the Black Sea and Indian subcontinent.”

Calgary-based grain handler GrainsConnect Canada — a joint venture between GrainCorp and Japan’s Zen-Noh Grain — on Tuesday opened its third Prairie grain terminal at Vegreville, Alta. and plans to open a fourth at Huxley, Alta. this fall.

In a separate joint venture, GrainsConnect and Winnipeg grain firm Parrish and Heimbecker are building Fraser Grain Terminal, a Vancouver export terminal expected to handle up to four million tonnes of grains, oilseeds, pulses and other commodities per year following its completion, expected next year.

New GrainCorp’s plan calls for GrainsConnect to “expand (its) origination footprint n Canada and enable (a) multi-origin service offering to customers in Asia and MENA,” referring to the Middle East and North Africa.

“Our portfolio review made clear that these businesses have different characteristics and would benefit from operating separately,” GrainCorp CEO Mark Palmquist, who in the demerger would become MaltCo’s new CEO, said Thursday in a release.

“A demerger would provide both MaltCo and New GrainCorp with increased flexibility to implement independent operating strategies and capital structures and allow them to attract investors with different investment priorities.”

Klaus Pamminger, now general manager of GrainCorp’s grains group, would become CEO of New GrainCorp following the demerger.

While the MaltCo demerger progresses, GrainCorp said, it “continues to engage actively with parties who have expressed an interest in acquiring part or parts of the GrainCorp portfolio.”

Specifically, GrainCorp said it has “engaged extensively” with Long-Term Asset Partners (LTAP), a Sydney-based asset management firm, about a possible takeover, but as of Thursday “has received no recent definitive update from LTAP.”

LTAP was set up in 2016 to pursue “long-term, patient investing in Australian agricultural assets and infrastructure.” In November 2018, by which time it owned a 4.2 per cent stake in GrainCorp, it made a “non-binding indicative proposal” to the grain firm, valued at $2.38 billion. — Glacier FarmMedia Network

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“All indications suggest we’ll see an increase in malt barley, as well as feed,” confirmed Peter Watts of the Canadian Malting Barley Technical Centre.

In light of China’s consummate ban of Canadian canola, some worry other commodities will be treated similarly. However, there aren’t yet any indications that that is the case for malt barley.

According to Statistics Canada, China’s demand for barley and malt is expected to increase steadily due to China’s lower grain production due to urbanization and limited farmland.

“It’s impossible to predict what will happen but there aren’t any indications that Canadian malt barley will be shunned to the same extent as Canadian canola,” he said.

Though China has a history of importing the majority of its barley and malt from Australia, Canadian-grown malt is steadily increasing its market share.

Australia grew 60 per cent of China’s imported barley in 2016, while Canada accounted for 20 per cent. However, given Australia’s inclement weather in recent years, Canada has gained some of the market share in China.

“Australia had a severe drought which curtailed their production significantly,” Watts said. “If they return to normal crop levels they’ll be back competitive on the global market.

“Malt barley production depends heavily on harvest conditions, particularly weather, so we’ll have to wait and see what sort of supplies there are.”

Aside from increased acreage, Watts hopes to see diversity in varieties of malt barley.

“As an industry, we’re looking to transition to new varieties,” said Watts. CDC Copeland and AC Metcalfe have dominated the industry for almost 20 years.

“We expect AC Metcalfe acreage to decline as new varieties increase,” he added.

“We’re looking for these varieties to be produced in more substantial quantities and become a mainstay in commercial systems in Canada and abroad.”

— Marlo Glass writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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“The price of feed barley is staying historically high,” said Brian Otto, chair of the Barley Council of Canada, noting feed barley at Lethbridge was currently trading at $5.50 per bushel, which would typically be considered a good price for malting barley.

“With barley prices that high, I think acres will go up,” he said.

Tight supplies worldwide, as Australia had a horrible drought, were contributing to the domestic strength, he said. “It’s just a worldwide shortage of barley, period.”

While increased acres and a resulting boost in production would likely lead to price declines, Otto said the Barley Council was also working on projects to increase demand.

One such project is focused on showing the intrinsic value of higher-protein Canadian feed barley in order to help develop the Chinese market further.

While the current diplomatic dispute between Canada and China is a concern to exporters, “we aren’t seeing anything that shows us that they’d restrict trade on agricultural products at this time,” said Otto.

China is the single largest export customer for Canadian barley, accounting for roughly two-thirds of the 754,900 tonnes exported during the first four months of the 2018-19 crop year, according to the latest monthly data available from the Canadian Grain Commission (CGC).

Total Canadian barley exports to date are running well ahead of the year-ago level, with the weekly CGC report showing total barley exports of 1.118 million tonnes, as of Jan. 13. That’s about 300,000 tonnes ahead of the previous year’s pace.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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