The crop 1999 alpha-acid supply deficit was offset by the availability of brewery and trade stocks. Nevertheless, the supply shortage resulted in price levels which were well above those of the previous year. This was, no doubt, due to the fact that neither Crop 1998 nor Crop 1999 was large enough to meet international alpha acid demand and that many brewers had reduced their forward-contracted commitments.

The effect of continuous reduction of hop acreage since 1992 was a balanced hop supply following the 1998 and 1999 crops, which presented a new market situation to all players. Crop 1999 price levels also served to stop the reduction in hop acreage and initiated the early development of the crop 2000 spot market.

It is clear that worldwide hop growers can no longer supply hops below production cost, as they have had to do in recent years. Many growers face an uncertain future, because they are unable to secure financing based upon their low forward contract prices.

The poor 2000 crop results in Tettnang, Slovenia and the Czech Republic have contributed to price peaks for these varieties. Poor crop quality and short deliveries from these areas had to be compensated with additional purchases of alternative aroma varieties.

The development of the bitter hops market for crop 2000 began before the crop was harvested. Several major brewers made "spot" crop commitments during the summer, which contributed to a tight market at harvest time. In addition, two warehouse fires in Yakima in September destroyed approximately 40,000 ztr. of hops.

Demand for future crop hops – and the timing of this demand - is the decisive factor for further market developments. By our estimate, Crop 2000 will be approximately 300,000 kilos alpha-acid below the alpha-acid requirements for the coming brewing year. This estimate takes into account the fact that crop 2000 hops contain above-average alphas. Long-term average alpha contents would have resulted in a shortfall of some 700,000 kilos of alpha acids.

This is the third crop in a row that has not fully met demand, causing marked increases in prices. Also, the ability to compensate for production shortages with old crop hop products has been reduced as inventories are coming more into balance.