All the news is about the weather, currency or Brexit and last week, Jim Brown, in his Farmer’s View column in The SF pointed out what was unique in January, 2018, was that he only recorded five inches of rain.

In his part of Scotland, that is not a lot and he reported that 2018 was the fifth driest in the last 30 years, with 33.25 inches. Here, in the Eastern Borders, that would be a ‘very wet’ year for us and the reliable Aitchison family records at Lochton, that go back to 1903, recorded 5.4mm, or less than a quarter of an inch of rain last month – the driest January since they started recording rainfall.

It was also the fifth driest month overall as well since 1903, with only March, 1929; April, 1912; February, 1934; and March, 1953, having less rain. Interesting to note that all the months are grouped together at the start of the calendar year.

Global weather is also in the news, with Australia having its hottest month on record in January and 2018 was its third hottest year on record, with only 2005 and 2013 being hotter. Temperatures reached 40°C and the average across January was above 30°C.

At the other end of the scale, in the US temperatures were as low as minus 41°C in Minnesota – lower than the North Pole – rivers and waterfalls were frozen and any winter planted crops would suffer badly with severe frost and winterkill.

Turning to currency, City financial assessments have viewed that a hard, no-deal Brexit seems increasingly unlikely. As confidence has grown, the value of the pound has been climbing.

From recent low on December 11, when the pound equated to €1.1031, sterling rose by January 24 to €1.1571 equivalent, an increase of 5%. It has since dropped back to €1.1305.

As the volatile nature of the pound currently holds the key to the direction of UK wheat futures, confidence and strength of the pound will remain the major driving force of the UK domestic grain prices. A rising pound and subsequent cheapening of products in euros, has prevented the potential gains seen in global grain markets from filtering into domestic markets.

Amid the bullish reports of a tightening outlook for Black Sea exports and global grain prices, UK wheat futures have been falling. During the month of January, old crop May, 2019, wheat futures have fallen from £178.50 down to £172. New crop November, 2019, futures since August 1, 2018 have been at £175 but last week were down to £154.15. During January alone, they were down £10 per tonne.

With around an £18 discount from old crop to new crop futures, this indicates that either old crop is too expensive, or new crop is too cheap.

This could also be because markets anticipate a larger 2019 domestic and global wheat crop. A 4% increase in the UK wheat area is estimated for this harvest, thereby reducing the chances of a tighter market.

Following the recent US federal shutdown, figures have not yet been fully released regarding US stocks and confirmation of their future wheat planted area which, if is larger than expected, will add further pressure to the market.

Although it is a bit early to draw conclusions about the size of the 2019-20 wheat crop, there is an increasing pool of evidence suggesting a big crop could be on the horizon. There are projected increases in wheat area for the major wheat exporters the EU, Russia, Ukraine, the US and Australia. These are partially offset by expected declines in Kazakhstan, Canada and Argentina.

There are also projected increases in area in Egypt, Turkey and India, three of the major consumers of global wheat.

Black Sea prices have provided the floor to global wheat markets in 2018-19 and the rising value of the rouble and reducing exportable wheat surplus has led to climbing prices and the rising value of Black Sea grain has supported global prices and the extent of this rally will depend on the exportable volume remaining in the EU, USA and Argentina.

Wheat shipments from Russia slowed notably in January, at 1.9m tonnes compared with 3.7m tonnes in December. In total this season, its exports amount to 26.5m tonnes compared to a target of 35m tonnes.

In the latest tender last week, Egypt bought 360,000 tonnes of wheat for March. However, there was a notable change in its suppliers, with France and Romania each selling 180,000 tonnes. This was the first such French sale since July, 2017.

Russia has dominated wheat exports to Egypt this season, taking more than 70% of the trade prior to that, but was uncompetitive for this tender., by at least $7 per tonne.

The discount of UK feed barley to feed wheat is now around £15 per tonne, the largest since August, 2018. In the week ending January 24, 2019, the average UK ex-farm feed barley price was £158.40 per tonne whilst feed wheat was £170.30 per tonne. During that week, feed barley and feed wheat saw declines of £1.30 and £6.50 per tonne, respectively, and this past week ex-farm feed wheat was down 20p to £170.10 and feed barley was down £3.20 to £155.20.

A rising discount of feed barley to feed wheat, will allow those who can to switch to feed barley for the rest of the winter feed period, although an outbreak of African swine fever in China could also reduce feed demand from the world’s largest pig herd.