raw materials July 25, 2014 ISSUE 021 RMI Analytics LTD. - North America Lake Geneva Rd. S.E. T2J2S5, Calgary Alberta, Canada

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Brittney Caldwell
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Advisor of choice for brewing raw materials July 25, 2014 Agricultural Markets The decline in grain prices has shown signs of slowing, if not halting together, and with good reason.

Harvesting in the EU still has some way to go but unlike the USA quality concerns have not been easing as combines have progressed, with rains on ripe grains found be causing considerable quality

1 Advisor of choice for brewing raw materials July 25, 2014 Agricultural Markets The decline in grain prices has shown signs of slowing, if not halting together, and with good reason. One is seasonal, with the USA wheat harvest approaching its end there is less pressure on prices from the weight of fresh supplies and increased farmer hedging. Harvesting in the EU still has some way to go but unlike the USA quality concerns have not been easing as combines have progressed, with rains on ripe grains found be causing considerable quality damage. In north-eastern France there are reports of 30% germination rates in grain and low falling numbers (hagberg readings). While yields appear to be holding up, the prospect of large downgrades to the EU wheat harvest may at least support milling premiums. As for feed grain markets, the rains threatening EU wheat quality are actually improving prospects for corn production, while the USA crop remains at among the highest rated on record. However, the picture of perfect US weather has cracked a little, with some concerns over a retreat in rains over some parts of the Midwest and temperatures above 100 degrees fahrenheit throughout the weekend in some states such as Nebraska and South Dakota. While there is an expectation corn prices are vulnerable to falling further in the autumn, under the harvest pressure now receding in wheat, the market is already reckoned to have priced in a USA yield of 170 bu/acre, above the record bu/acre the USDA estimates. Participants inspect a Trial field During the Czech and Slovakia Crop Tour by RMI Analytics Source: RMI Analytics European Barley The EU winter barley harvest is mostly finished and overall results everywhere are good to excellent. Yields have been similar to last year s level, or even slightly better, with HL-weights in most areas much higher than the minimum feed barley requirement of 62/63 kg/hl. Also protein in winter malting barley is at acceptable levels of around 10% with good screenings. All eyes are now on the spring barley harvest, which has started in France and Germany. Quality will be mixed with some fields very good, returning results of % protein, good yields and screenings largely above 90% while there are others with only 70-75% screenings and protein up to 11.5%. It is the same picture in Germany where maltsters and cooperatives Page: 1

July 25 2014 Premium of 2rs malting barley over feedbarley (fob creil) Premium of 2r spring malting barley over feed barley 50 45 40 35 /MT 30 25 20 15 10 5 0 10 year average Crop 2013 Crop 2014

In Spain market participants huge rainfall might have led to in the country confirmed a number quality average of 7m MT, well below last year s spring barley is returning 6 MT/Ha, good harvest of 10.

RMI Analytics latest of the UK has a good weather crop tour about 10 days ago in forecast for harvesting this week, the Czech Republic and Slovakia so winter malting barley should confirmed get

5 mm) sieve but the wave in one week of June during results were getting much better corn filling, caused some damage. at 85-95%. Proteins are low at People on the ground in Czech under 10.

2 July Premium of 2rs malting barley over feedbarley (fob creil) Premium of 2r spring malting barley over feed barley /MT year average Crop 2013 Crop 2014 along the Rhine in early regions The total barley crop is expected to were satisfied after some fears be 1.66m MT, which is 4.4% above that and In Spain market participants huge rainfall might have led to in the country confirmed a number quality average of 7m MT, well below last year s spring barley is returning 6 MT/Ha, good harvest of 10.1m MT, with % protein and screenings 10% of that malting barley. Most around 90%. RMI Analytics latest of the UK has a good weather crop tour about 10 days ago in forecast for harvesting this week, the Czech Republic and Slovakia so winter malting barley should confirmed get recent thunderstorms damage. the On heterogeneous completed quickly. Early nature of crops. In Slovakia a barley was very thin though at a lack of rain, but especially a heat 0,1 inches (2.5 mm) sieve but the wave in one week of June during results were getting much better corn filling, caused some damage. at 85-95%. Proteins are low at People on the ground in Czech under 10.5% and yields are above Republic average. confirmed government In Scandinavia early yield estimations of 4.7 MT/Ha cuttings were done but the main for spring barley leading to a total part of the barley harvest will start spring barley crop of 1.1m MT, within 7-10 days. 40,000 MT higher than last year. Malting barley prices (fob Creil) Malting barley prices (FOB Creil) Euro/MT Crop 2013 Crop 2014 Page: 2

July 25 2014 USA Barley Across barley growing areas temperatures have been 6-10F (3-5C) above normal leading to good advancement in the early part of the month across North Dakota, Minnesota,

3 July USA Barley Across barley growing areas temperatures have been 6-10F (3-5C) above normal leading to good advancement in the early part of the month across North Dakota, Minnesota, Montana, Washington and Idaho but now rains are needed, especially in the west. Most regions need about 0.5 inches (12mm) to carry them over until harvest with most regions seeing falls around these levels during this week. In the east it has been typically cooler with crops still behind in North Dakota but still in a good position regarding moisture following good rains in spring. Montana has seen rapidly developing crops over the last few weeks, thanks to hot weather, and in the last 24 hours scattered showers and thunderstorms have given winter crops a good final boost and helped keep spring crops watered. Over the next ten days a cold front is moving in to the north west which will see temperatures decline and showers coming to the growing states. Latest USDA ratings say 55% of the crop is in good condition (sheading two points since our last letter), 29% fair and 11% excellent, comparable with previous years. Heading is reported in 92% of the crop across all five growing states, well above the five year average of 86%. Idaho is still well advanced at 100% headed and farmers are expected to start USA Heat Index Source: NOAA harvesting soon while North Dakota and other northern states are farther behind. USDA says Idaho has only planted 550,000 acres (222,577Ha) compared with 600,000 acres (242,811Ha) for 2013 but people on the ground there dispute this and say the planted area is closer to 2013 levels. Regarding domestic pricing old crop (2013) malting barley is pegged at USD259/MT while new crop (2014) is USD261/MT delivery Vancouver, Washington. Canadian Barley Above average temperatures over the Prairies have helped fields dry out and improved general conditions for crops since heavy rainfall saw flooding across Manitoba and Saskatchewan a month ago. Current expectations put the damage in Saskatchewan at 1.2m HA. Most malting barley escaped flood damage due to a variety of factors, including higher elevation, with expectations 500,000MT of malting barley will be severely damaged. In northern Alberta s Peace Country dry conditions are proving a worry at the moment but this week they should get about inches (20-30mm) of rain which will sure up farmer expectations. For Saskatchewan and Manitoba current warm 80-90s F (high 20s C to low 30s C) temperatures look set to continue while for Alberta cooler 70-80s F (mid to low 20s C) are keeping growers happy after heat last week. Scattered showers are expected to fall across most areas in the coming week with about one day s rain expected for all regions in the next ten days. In Lethbridge old crop (2013) feed barley prices have firmed to USD /MT while new crop (2014) is USD172/MT and USD241/MT FOB west coast. New crop malting barley (2014) is currently being pegged at USD330/MT. Page: 3

July 25 2014 USA Hops At the beginning of July, ten days after our last Letter, the crop in Yakima was starting to look a bit behind with expectations of an average yield, but fast forward up to

4 July USA Hops At the beginning of July, ten days after our last Letter, the crop in Yakima was starting to look a bit behind with expectations of an average yield, but fast forward up to today and things are very different. Heat over the last two weeks, briefly reaching 105F (40C), helped crops improve and expectations of a good crop have become strong again. Temperatures this week have started to drop down into the 80F (26C) range, which growers are welcoming following the heat. Spider mites are under control across growing areas while powdery mildew is a problem but growers are used to dealing with it and they will get a handle on it. Some areas are seeing early blooming with those farmers expecting their harvest to begin on August 20 while everyone else has September 10 circled in their calendar as the day they want to bring in the crop. So far there haven t been any serious storms in the region to worry about so hop yards are looking solid. Douglas MacKinnon from 47 Hops says he believes if 2014 delivers an average or slightly below average yield then the entire crop will be sold out. The situation on the ground would have to improve quite a bit for there to be any significant quantities of spot hops available from any aroma varieties from the 2014 crop, Mr. MacKinnon said. We hear even the 2015 crop is selling out quickly with brewers who suffered from a lack of hop contracts in 2014 locking in five-year supply contracts to ensure they get the raw materials they need. Currently in the Yakima Valley weather conditions Hallertauer Mittelfrüh hops forming their first cones Source: HVG Germany (@HVG_GERMAN_HOPS) are perfect with reservoirs at % and daytime temperatures of up to 80F (26C). Idaho can look forward to similar conditions to Washington after hot temperatures while Oregon is also turning cooler as a cold front comes across the western USA. European Hops Most regions in the EU are expanding their acreage with Germany adding 1134 acres (459Ha), Czech Republic planted another 247 acres (100Ha) of Saaz hops and renewed 741 acres (300Ha) of old root material, Slovenia planted 222 acres (90Ha) of Celeia, Poland put down 49 acres (20Ha) of Lubelski and French growers planted 148 acres (60Ha) of aroma varieties. In Germany growers are continuing their change from Taurus and Magnum to Herkules, now the most grown hop in Germany. For the growing regions of Germany hot, dry weather in June and early July has been replaced by heavy rain with about 3 inches (50-100mm) of rain falling on Monday alone. Growers expect an average crop for 2014 of 74.96m lb (34,000MT) well above last year s below average crop of 59.52m lb (27,500MT). Temperatures at the moment are in the high 80s (27-28C) with sunshine expected in coming days providing excellent conditions for the development of alpha acids. Farmers say if the weather conditions Page: 4

July 25, 2014 remain favourable over coming weeks the crop could and sunshine when needed. Harvest is about four to be above average. In neighbouring regions of the six weeks away.

5 July 25, 2014 remain favourable over coming weeks the crop could and sunshine when needed. Harvest is about four to be above average. In neighbouring regions of the six weeks away. On the supply side aroma stocks are Czech Republic and Slovenia reports are of similar very tight with European brewers and distributors, good conditions, free from storms with good rainfall who have since locked in USA hop supply contracts, Industry News Easily the biggest news in the industry was word Stone, and others, should be a wakeup call for the California based Stone Brewing Company is making a EU craft brewing sector, reminding them if they don t move into the EU market, announcing it will open a take advantage of growing demand for craft beer brewery in Berlin late next year. The facility will brew their more developed cousins across the Atlantic will staples of the brand such as its IPAs and Arrogant do it for them. Bastard Ale but also aims to work with local craft In Australia figures were published this week brewers to create original brews. But Stone isn t from Roy Morgan Research show one million people the only player moving into the EU with San Diego are drinking craft beer a month with the states of based Green Flash teaming up with a Belgian brewer Queensland and New South Wales leading the growth to produce IPAs for the European market while the in consumption. In the five years since figures on craft Brooklyn Brewery has opened the Nya Carnegie beer consumption were first compiled the number of brewery in Stockholm with Carlsberg. The move by people drinking craft brews has doubled. Notice to subscribers Please note that this publication is covered by the International Laws of Copyright. Copying or transmission of all or parts of the publication to a third party is strictly prohibited. Every effort has been made to ensure that this Journal contains accurate and current information. RMI Analytics AG shall not be liable for any loss or damage suffered by subscribers as a result of any information or opinion given in the publication as a result of any information or opinion given in the publication. If you have further questions, please contact us: info@rmi-analytics.com

Hop Market Report 14th June 2017

Hop Market Report 14th June 2017 Hop acreage grows by approx. 3.060 ha (+5,4%) to 59.200 ha worldwide ******** Normal growing conditions so far; balanced alpha supply and demand expected for brewing year