Hops stocks

Bales of dried hop cones are opened at John I. Haas Inc. in Yakima, Wash. Cones are turned into small pellets for later processing into extract used in making beer.

MOXEE, Wash. — U.S. hop stocks totaled 165 million pounds on March 1, down 2% from 2018 after three years of increases.

“With any swing in the market, history has shown time and time again there is bound to be an overcorrection. This is a sign the market is balancing back out,” said Jaki Brophy, spokeswoman for the Hop Growers of America and the Washington Hop Commission, both in Moxee.

Washington state produced 73% of the nation’s hops in 2018 with Idaho at 15% and Oregon at 12%.

Production was pushed upward for years by 20% annual growth in the craft beer industry. But the growth of craft beer has slowed to 5% a year since 2015, resulting in the growth of hop inventories.

In December, Pete Mahony, vice president of supply chain and purchasing for John I. Haas Inc. in Yakima, said hop consumption appeared to be keeping pace with supply, a positive sign.

The industry hopes that’s the case, preventing oversupply and a downturn in prices but there are a lot of variables, Ann George, administrator of Hop Growers of America and the Washington Hop Commission, said in December.

The supply of some aroma hop varieties is still expanding to meet craft brewery demand while the supply of other varieties is shrinking because it has met demand, she said.

In 2015, few hops were available on the spot (uncontracted) market because of “lower yields due to unfavorable weather and too many new or fast-growing breweries relying too heavily on spot hops either due to a lack of knowledge in the hop procurement process or an unexpected quick growth in their brewery,” Brophy said.

Additionally, with more varieties becoming more widely available but still growing to meet demand, many breweries scrambled to contract those new varieties so they would not be at the mercy of a short market and an over-reliance on spot hops, she said.

This was at the same time the Brewers Association projected that craft beer would have a 20% market share by 2020, which was an overestimation, she said.

“So, in a sentence, we had an overcorrection happening at the same time as a market slowdown — still a growing market, but growth had slowed down considerably,” Brophy said.

The March 14 National Agricultural Statistics Service report shows 130 million pounds held by dealers and growers on March 1 and 35 million pounds held by brewers. That compares to 132 million and 37 million, respectively, held a year earlier.

A lot of breweries are taking advantage of more frequent just-on-time shipments to save on space, Brophy said.

Acreage likely will still increase some this year to meet the needs of some newer, high-demand varieties, she said.

Overall production should be stable, she said. Production reached a record 107 million pounds in 2018.

Central Washington field reporter

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