It has been a busy spell recently with spring sowing getting underway due to the good spell of dry mild weather and a lot of fertiliser applied and sprayers in action as well.

The fields are in good fettle for working on and conditions have been more or less ideal for the time of year compared to last year at this time following the beast from the east.

The rivers are all still running low and with only 5.4mm of rain in January and 21.3mm here in the Borders in February that is the equivalent of only one inch of rain here in 2019 so far, and with no snow to come from the hills, the rivers and reservoirs are going to need rain before too long.

It is the driest winter in Eastern Scotland since 1964 and the fourth driest in history.

The average temperature in Scotland from December to the end of February was 8.6C which is only just below the all-time record set in 1998 of 8.7C so no wonder we are seeing all the spring flowers out in February and even storm Freya missed us last weekend.

World wheat markets are currently showing little signs of recovery as major exporters fight to compete with lower prices to win the current tenders on offer and other holders of wheat are selling their stocks, as there looks likely to be a larger wheat production tonnage this harvest.

November 2019 old crop UK feed wheat futures have lost £12.65 since the beginning of January due to the anticipation of a big global new crop compared to last year’s crop, but the same loss has not been seen in the physical market where ex-farm values have fallen by just £6.10 since January 3, and less in Eastern regions of the country.

The premium of Scottish feed wheat over East Anglian wheat for May delivery has narrowed from £9.50 to £2 per tonne. This highlights the volume of wheat available in Scotland, which needs to price lower in order to find demand.

UK wheat markets found some support this past week following the announcement that Ensus will resume processing wheat at their Teesside bio-ethanol plant and this saw May 2019 liffee feed wheat futures rise by £1.25 as a result.

There could be an issue with maize being used instead of wheat given the volume of maize already in the UK and its relative price difference, and we may see a greater increase in maize usage than wheat for biofuel.

However, due to Brexit and the possibility of an extension to Article 50 instead of leaving the EU without a deal on March 29, this is affecting prices as sterling firmed this past week to a 21-month high from £1.15 to £1.16 versus the euro, and May 2019 old crop futures closed last week at £162.25 which is a £4.40 down on the previous week and down £14.00 since the beginning of January.

New crop November 2019 futures were down £4.75 on the week to £145.25 and the discount from old crop wheat into new crop currently stands at £17 per tonne.

By the middle of February total US wheat exports had reached 14.99m tonnes compared to 16.64m tonnes in the same week last year.

US exports for 2018-19 have been forecast to increase to 27.22m tonnes, up from 24.52m tonnes, leaving 12.23m tonnes of wheat left to export in 2018-19 which is 4.34m tonnes more year-on-year and with plenty of US wheat left to export, and the timescale to do so getting shorter, the global old crop outlook will continue to be concerning for prices.

The EU has only exported around 50% of its export potential with still around 6.3m tonnes to be exported and the export pace has been well behind previous seasons and prices will continue to drop as exporters compete to get a share of any business to be done for the rest of the season.

There appears to be large volumes of wheat to move from the Black Sea region and Russia has increased its export forecast total to 35.9m tonnes.

Not helping these prices is the outlook for new crop wheat which looks promising as mild and good conditions have been favourable for European and Black Sea winter crops, and in the Ukraine spring fieldwork is underway with winter crops in good condition.

US wheat prices have dropped by $20 per tonne since the beginning of February in order to remain competitive in the global market and Chicago, May 2019 wheat futures have dropped by 11% since February 13 compared to Paris, May futures down 7% and UK futures down 6% for the same period.

The area planted to maize in the US is forecast to grow by more than 3% to slightly more than 37m ha and will be the largest area grown since 2016.

This will replace soybeans which are forecast to fall in area by 5% to just over 34m ha.

The latest figures from the USDA suggest that the area planted to spring wheat may increase, reducing some of the loss in winter wheat area.

The figures suggest a 2% fall in total wheat area compared with the 4% fall in the area planted to winter wheat and with average yields we could see US production of wheat rise year-on-year adding another problem to the world wheat market where the top eight global wheat exporters will have 395m tonnes to shift in 2019-20, compared to 368m tonnes in 2018-19 which is an increase of 7.1% of wheat to find a home.

Last week the UK corn Return data showed the ex-farm feed barley prices to have reached the largest discount to feed wheat since pressure during harvest in July, extending to over £20.00 less than feed wheat. In the UK the price competitiveness of maize has led to increased usage at the expense of barley.

The uncertainty of Brexit, now getting closer and the unclear trading relationship with Europe and possible implementation of tariffs for the latter part of the season, has also been pressuring barley markets and booked exports for feed barley post March are minimal.

The average ex-farm sale value of barley has fallen by more than £2 per tonne from the beginning of January to the end of February.

As markets expect a larger domestic and barley crop, a considerable new crop discount and harvest pressure offers little incentive to hold stocks into 2019-20 and follows animal feed demand for feed barley down 14% in 2018-19.

Bread milling wheat ex-farm was down £1.30 last week to £177.50, feed wheat was down £2.50 to £163 and feed barley was down £3.70 to £141.10 which puts feed barley at an actual discount to wheat of £21.90.

Old crop malting barley prices continue to drift lower as well due to lack of demand and Brexit issues as well, stopping any fresh export business, and EU values have also dropped but premiums over feed barley remain at attractive levels.

Earlier in the month Chicago soybean prices rose after President Trump postponed the March 1 deadline for trade talks with China, a move that delayed the increase of current tariffs to 25% from 10% and China’s proposed commitment to purchase 10m tonnes of US soya in the near future strengthened prices as well.

Now we are seeing the end of the Chicago soybean rally in prices as negotiations have continued and the prospect of a timely trade agreement appears to have diminished and the benchmark oilseed futures market has come under pressure.

As the negotiations drag, US exports and potentially high ending stocks have been pressurising US soybean prices.

The longer that trade negotiations last, the window for US soybeans exports reduces. Additionally, as the Brazilian soybean crop is more than 45% harvested there is now an increased availability of Brazilian soybeans for the export market.

China’s demand for soybeans is expected to fall as the outbreak of African swine fever in China is likely to see demand of soybeans cut by 5% to 66.8m tonnes as the total pig herd is forecast to be reduced by 15% and pork production to have fallen by 10-20% and all this just adds to a bearish tone to an already falling oilseed rape market.

From a UK perspective, additional pressure has come from the general strengthening of sterling since mid-January which now stands at £1.1632 to the euro making futures contracts worth less in sterling terms and UK oilseed rape delivered Erith was down £6.50 last week to £313.50 per tonne and is now £23.50 lower than at the beginning of 2019.

Further declines in the value of rapeseed are being driven by the prospect of a resumption in Argentinean biodiesel imports.

The agreement between Argentinean biodiesel producers and the EU will allow 1.2m tonnes of biodiesel exports from Argentina annually at a minimum price, which could reduce local crush demand.

Although values of both new and old crop rapeseed prices have fallen, there is reason to be optimistic about the future outlook.

EU production is put at 18.1m tonnes which will be down, and could go down even further as France, Germany, Poland and the UK are all forecasting reduced oilseed rape areas.

As a result of the reduction in planted area, it is likely that EU oilseed rape production will be at a multi-year low and the EU oilseed rape deficit is likely to grow, so there will be an increased need for importing oilseed rape in 2019-20.

Canola sowing in Australia is about two months away and currently, dry conditions prevail and canola is not as an attractive proposition to Australian farmers at current market prices.