UK-India trade deal to boost malting barley demand? Grain market daily

• May-25 UK feed wheat futures closed at £161.00/t yesterday, up £0.80/t from Friday’s close. The Nov-25 contract lost £2.50/t over the same period to settle at £182.00/t
• New crop UK feed wheat prices diverged from the equivalent Chicago and Paris wheat contracts yesterday. Chicago and Paris markets were supported yesterday as both markets have become more competitive on the export market. UK markets didn’t feel the support as both the US dollar and euro weakened against sterling
• Nov-25 Paris rapeseed futures closed at €478.50/t yesterday, up €5.25/t from Monday’s close. While the wider oilseed complex closed down yesterday, rapeseed followed oil markets up

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Yesterday (6 May), following three years of negotiations, the UK and India agreed a trade deal, which will see tariffs cut on a basket of British products exported to India. One of those products being whisky.

Pre, what is being described as a ‘transformational deal’ by the Scotch Whisky Association (SWA), tariffs on UK whisky exports to India stood at 150%. However, under the new deal, tariffs have been halved to 75% and are expected to drop to 40% after 10 years.

By volume, in 2024, India was the world’s largest importer of Scotch Whisky, with 192 million bottles shipped to India. Following the recent tariff hikes from the US (who for a long while have been the top importer of Scotch by value), the trade agreement with India will likely be very much welcomed by industry. The SWA have said that the new trade deal has the potential to increase Scotch Whisky exports to India by £1 billion over the next five years.

For some time, the narrative around UK malting barley demand has been somewhat lacklustre, with the trend of fewer younger people drinking, capping growth in usage by the brewing malting and distilling (BMD) sector. Human and industrial (H&I) usage (mainly made up of BMD demand) of barley in 2024/25 is expected to fall for the second consecutive year according to the March UK cereal supply and demand estimates. At 1.782 Mt, barley H&I usage this season is 7% down on the year and 4% on the previous five-year average.

While it is likely that Trump’s tariffs may have an impact on UK whisky trade, the new deal with India has the potential to outweigh any possible drop in demand from the US. The UK-India trade deal also has the potential to bolster UK malting demand (albeit not this season at the very least), in a time where we are seeing reduced domestic demand.

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