Hop Contracts

[billk]

I was wondering what everyones opinion on upcoming long term contracts are. I am currently in a three year contract, which has saved my ass with everything that has happened, but am already being asked to get into contracts for my 2010 and 2011 hops. What my concern is that the opposite of what is happening now could happen to me when the hop market corrects itself, being stuck in a contract paying more than market price for my hops. I was curious as to what everyone else is doing now for long term contracts and where people think prices may end up (I know it's a guess).

Thanks,

Bill

[BMOOR]

I too have contracts for three years out and am very happy about them. From what I have heard from very reliable sources is that "corrections" in the hop market won't happen like you think. High hop prices are here to stay-they just may not rise much. Plus if you over contract, there is a chance that they could let you out of parts of your contract if demand is still high (and I presume it will be) or there would be a willing buyer out there.
IMO this isn't a "one or two year blip" in the hop situation. Contract what you think you will need and keep your fingers crossed.
My contracts are in place mainly to cover availability. Cost is secondary to me-but I am a very small player.
Good luck

[gabewilson50]

From everything I've heard and read, we're not going to see the old hop prices for a very long time. The prices we all got to know and love were due to overstock from previous years. When the farmers saw that they were producing a product that had plenty of reserves, therefore keeping prices "artificially" low, they decided to get out of the hop growing business. Now that those overstocks have been sold, we're wholly dependent on what can be grown, so the few farmers who grow hops now can call the shots.

IMHO, for the time being, long term contracts will at least help to tell farmers how much hops need to be cultivated in a year and which types. Apparently, the powers that be had trouble predicting this in the past, and now has lead us to the situation we are currently in. Anything we can do to help tell them what we'll need (in this case a contract) to help them out will also help us out a whole lot and relieve a whole bunch of headaches.

Hey, on the plus side, at least when you pay for hops, you just pay for the hops and UPS shipping. I then have the additional headache of international shipping, import permits, import fees, etc., etc., etc. Consider yourself lucky that you've paid great prices up until now and have the opportunity to lock in hops for the next couple of years.

--Gabe

[einhorn]

The are no hop growers/dealers out there who are voluntarily selling hops under market price. If you get into a contract situation, you are paying for availablility. If you buy year for year, you may pay less, you may pay more. It's all a question of priorities.

Be aware: a contract is just that. You may end up having to buy quantities you do not wnat or need and have to sell them off. I can't imagine them "letting you off" just as you do not want them to say towards the end of the year that the prices are rising.

[BMOOR]

The are no hop growers/dealers out there who are voluntarily selling hops under market price. If you get into a contract situation, you are paying for availablility. If you buy year for year, you may pay less, you may pay more. It's all a question of priorities.

Be aware: a contract is just that. You may end up having to buy quantities you do not wnat or need and have to sell them off. I can't imagine them "letting you off" just as you do not want them to say towards the end of the year that the prices are rising.

Right, if you contracted, you have to buy them. But what I meant is if a shortage continued and a supplier had regular customers that were pestering them for more hops, a GOOD supplier would gladly call up the guy with too many and ask if he could sell them to company B who was in need. That is the way the craft beer industry should work and those are the companies I do business with. BTW, this example happened to me and I am happy to say I will continue doing business with that company.

[JoeV]

Is anyone managing to get contracts for 2008 and beyond? Hop Union told me that there is a log jam of ~350 waiting for contracts. Just wondering if anyone has any new information.

Cheers,
Joe