Global state of hop production in 2017

Welcome to the Glacier Hops Ranch blog!

Our intent is to provide you with useful information that will help you with your planning and decision-making in your sourcing of hops and hop-ingredients.

First, Let’s take a look at the global state of hop production this year, and get an idea of what to expect with this year’s harvest.

US Production – RECORD US HARVEST, SAYS USDA
An all-time record number of acres (again) has been driven by the Craft brewing industry, and its high hopping-rates. Pacific Northwest (Washington, Oregon, Idaho) acreage is up another 6.45% to another record 54,235 acres.

What we have been hearing: 2017 has been a solid “normal” growing year in the PNW, with good winter precipitation filling reservoirs for irrigation, and while it was a late, wet spring, plants appear to have caught up and barring any unforeseen natural calamity (cross your fingers), pre-harvest forecasts look to be normal, especially compared to last year. Additionally, baby plants from Spring of 2016 look to be producing solidly this year. USDA just announced its yield per acre forecast: UP 5.25%

What the USDA is forecasting: A record US crop. Production forecast expected to be 11.99% over 2016 and a whopping 23.7% over 2015.

What does it mean? This record crop, combined with with a slowdown in the rate of growth of the Craft segment, means a potential glut of some varieties of hops (while a controlled shortage and high prices remain for other popular varieties). Be careful on your forward contracting.

Outside of Washington, Oregon and Idaho, acreage among small growers continues to increase at a faster rate, with Michigan in the lead with over 800 acres this year. Interesting to note, NON-Pacific NW acreage is up to about 2,500 acres, an 18.7% increase, representing 4.4% of the total U.S. acreage. Yes, the small growers are not going to challenge the PNW anytime soon, but their rate of growth continues to exceed the established growing regions.

What does it mean? Locally-produced hops have found a place in the U.S. Craft brewing industry.

European Production
A drought that began in late spring (90F in Siberia in June? Can you say “hot as Hades?”) has put a dent in much of Germany’s production again this year. Only 16% of German hop acreage is irrigated, making them susceptible to drought (and dare I say it…”climate change”?) Just remember, in agriculture, Water is King.

What we are hearing: Look for a major dip in production of European Alpha varieties this year. Coincidentally, for the first time in years, more acres of high Alpha varieties were planted in the Pacific NW, which possibly could offset and balance what otherwise might be a global shortage of Alpha hops.

We are also hearing that some of the large global dealers are already securing additional Alpha variety volumes pre-harvest, to make sure that they have enough to offset what looks like another European Alpha variety shortage.

Where are prices going? Up or down?
It depends. What we are seeing is that many brewers over-contracted in the last couple of years, assuming that the Craft growth curve was going to continue on a similar trajectory. As we know, growth, while still happening (depending on your definition), has stalled and has not impacted everyone equally.

We are seeing an unequal redistribution of warehoused hops, demand and pricing. Some, particularly the proprietary varieties, are going to maintain their price premiums, while more than one of the public aroma varieties are seeing some potential declines in pricing. Bottom line, it is not the same across the board with all varieties, so understanding the market, when to buy, and when to lock in, is important to understand.

We are happy to share more specific details and advise you with what we are hearing on both the Spot and Contract markets. Feel free to drop us a line at hops@glacierhopsranch.com with your questions.

Cheers, and welcome aboard.
Tom