The closing report crop 2006 (Czech Republic)

1. Situation, first guess

Crop 2006 seems to be one of the most difficult one in last many years. It has got following reasons:

a/ yield and quantity

In case of Saaz variety following acreage was harvested: 3.730 ha in Saaz growing area 635 ha in Auscha growing area 576 ha in Trschitz growing area

At the moment expected / guessed / yield by Saaz variety Around 0,8 t/ha in Saaz growing area what means crop approx. 2984 tonns Around 1,03 t/ha in Auscha growing area what means crop approx. 654 tonns Around 1,45 t/ha in Trschitz growing area what means crop approx. 835 tonns

Total harvested Saaz variety should be then around 4.473 tonns in whole Czech Republic. We think that this guess will be in range plus minus 100 tonns close to final number.

This disaster has two main reasons- weather development during spring and summer, when May-June was very cold, July with tropical heats and draught influed the cones development.

In Saaz growing area is one more factor- hails storm on May 20th,2006, which hit strongly south part of the area. More or less was touched about 1.000 ha of hops, which was not harvested at all or gave yield 0,4-0,7 t/ha. As far as further Czech varieties concerns we have due their later harvesting just very rough numbers at the moment. Premiant variety has even for 20-25% weaker yield than average /around 1,4 t/ha/ and is harvested on approx. 173 ha our guess of total quantity is around 240 tonns this crop.

Sladek variety could be below average / expected yield around 1,5 t/ha/ and is harvested on approx. 222 ha our guess of total quantity is around 340 tonns this crop.

Further varieties / Bor, Magnum, Agnus, Harmonie and test varieties / was harvested on approx. 85 ha, total quantity should be around 140 tonns, which do not have commercial impact.

From above mentioned guessed numbers it seems total quantity could be around 5.193 tonns of hops what is one of the quantity-lowest crop in last 15 years. We bet it for „third place“ in the history after crops 2000 / 4.864 tonns/ and 1998 / 4.896 tonns/.

As far as Saaz variety regards it can be even lowest production ever, because at the moment was lowest quantity in 2000- 4532 tonns.

b/ alpha acids content

If quantity seems like one of the worst crop ever, regarding alpha acids content in Saaz variety we can tell already now it is the worst one. Analysis fluctuate in range 1,5-2,7% , alphas over 3% are exclusions / about 7-10% of all analysis/. Is no difference between traditional and VF hops. It shows, that average for Saaz variety of the crop 2006 will be most probably in range 2,0-2,2%. Till now worst crop from this point of wiev was 1994- 2,7% followed by crop 2003-3,0%. Alpha average of Premiant seems to be around 6,5% what is underaverage also / long term average is about 8,5%, the weakest crop was 2003-5,5%/

Alpha average of Sladek seems to be around 6,0% what is slight underaverage. /weakest crop 2003-4,3%/.

For further varieties analysis not finished yet.

c/ further characters of Czech hops- in case of Saaz is aroma much weaker and different from other crops, colour and other characters are in line. From diseases overaverage appearence of red spider was mentioned.

2. Comparison with crop 2005

We can see a couple of interesting comparison with previous crop 2005, which was on the other hand one of the biggest in history.

Sklizeň

2005

Sklizeň

2006

%KG 06/05

%alfa 06/05

3. Influence on the market, market situation, foreseens

a/ relation with crop 2005 - big crop 2005, when pool was first time in the Czech Republic created had influence on the pushing of the prices of Czech hops down from breweries side. Together with further streghtening Czech currency / about 5% in period September 05-September 06/ became many businesses on the border of profitability. On the other hand due high yield and quite big spot market in last year growers was satisfied with partly transfering of this breweries pressure on them. This way was whole huge crop 2005 sold out / last small parts of the pool in August/. Facing to present situation is a question how big stocks of Saaz crop 2005 are at the moment by hop dealers and breweries. With high probability stocks by breweries will be completely consupted, stocks by hop dealers sold./ mainly if alpha acids content and aroma profile is much better than crop 2006/. At the same moment higher purchases with shipments already in early autumn 2007 out of the crop 2007 can be expected, because technological reserves in breweries should fall down close to zero level. / depending, of course, on concret customers/. Anyway present alpha sales of Saaz from the economical point of wiev are far away out of reality. We can expect:

• not existing spot market this year
• using technological reserves of the breweries, partly replacing crop 2006 with rest of the crop 2005 offered by several hop dealers
• due to different aroma character possible slight change in final product-beer- in case of breweries which use Saaz as a big part of whole hopping
• for breweries using Saaz on the kg alpha principle nessesity of recalculating the dosages / standartization in pellets 45, which is in normal years 5-6% alpha can not be higher than 3,5-4% this year.
• increasing the prices of Saaz for further crops
• partial replacement of Saaz variety by some other varieties in some breweries

b/ foreseens As far as future concerns will be extremely important two factors:

• situation with crop 2007 Present situation will have fatal impact on some weaker growers in the Czech Republic and some of them will reduct their hop acreage or even completely leave the business. All other will continue on „surviving principle“ and renewing of the hopgardens as well as other investment will fell down close to zero level. It will lead to situation, that even next crop / if will not come „ weather conditions miracle as last year“/ will be in best case average to slight overaverage as far as yield regards. Alpha acids content is absolutely unpredictable value and after last years experiences can vary in range 1,8-4,5% as average.

-sales market and breweries decision It will be extremely important how breweries will evaluate the situation- are two possible ways- crop 2006 situation as an extreme, when will be ready to roughly keep the used portion of Czech hops and at the same time will be ready to accept increased prices for further crops, than can be moreless maintained on present level-total quantity of Czech hops should stay on the market with a little bit higher demand than offer. Second way is decreasing the Czech hops needs by breweries or its replacement by other provenience varieties. Then most probably total traded volume of Czech hops can be reducted by 15-40% , when the prices will stagnate. In this model situation would stay on the market on one side only several sure customers- SAAZ users, on second side the economically strongest hop growers. The price increase would go slowly with fluctuances depended on each concret crop, spot markets would not exist in fact.

We are looking forward to meet you by our first crop 2007 report in May 2007.