January is slipping away with little adverse weather and still not much sign of winter cold and frosty conditions.

There have been reports of seed drills out working in parts of England. but here in the Borders there is still surface water lying and where there had been machinery making tracks in the fields throughout winter, they are all lying full of water.

This past week had seen some relatively dry weather, but it would be good to get some frost as well to kill all the bugs and break up some of the heavy waterlogged soils.

At least the Brexit nonsense has calmed down, but we are not far away now from January 31 when it is all supposed to take place – it will be interesting to see how the negotiators get on with sorting out all the deals and tariffs that will come into play in the future.

Another ongoing issue that appears to being put to bed is the US-China trade deal, which is coming to a conclusion at last. Phase one of the deal is a pledge by China to purchase US goods based on market conditions, rather than committing to volumes of commodity purchased. In other words, wheat purchases would only be made if the wheat was needed and prices were favourable.

The recent rally in US agricultural futures has meant that wheat prices are uncompetitive when set against other wheat producing countries, so even the market is not quite sure how this new China-US deal is actually going to work in practice.

That wheat futures rally continued this past week, reaching 14-month highs ahead of the new deal which said that China would make significant purchases of US agricultural products. It is to start buying a large tonnage of US wheat, which would see fulfilment of its import quota and allow it to import up to 9.6m tonnes of wheat in 2020.

However, the reality is that China imports between 3-4m tonnes annually and it is likely this season that 1m of those tonnes will come from France. The USDA currently estimates, however, that that more than 147m tonnes of wheat are currently in stock in China which is more than half the world’s wheat stocks.

Support for US wheat came from the latest USDA report which indicated an increase in 2019-20 domestic feed usage, resulting in wheat ending stocks being at their lowest for five years and also the US winter wheat planted area for 2020 has fallen again down to 12,466,000 ha – that could be the lowest planted area since 1910.

Wheat markets were also supported by Russia proposing to set a non-tariff quota for grain exports of 20m tonnes from now until June, 2020. During 2019-20 its is forecasting a production of 73.5m tonnes of wheat and 34m tonnes of that is expected to be exported.

In 2017-18 Russia exported 53% of its exports between July and December and last year (2018-19), that figure increased to 70%. So far this season, it had already exported approximately 21.9m tonnes up to December.

By comparison, the EU still has more than 50% of its forecast wheat exports remaining, while the Ukraine had 30% as at the end of December.

In the UK, the 2019-20 season began with the need to export a large volume of wheat due to the large 16.2m tonne wheat harvest and wheat prices were at a competitive level into the EU and to some other wheat producing countries.

Our exports until October were at such a level that it would have been on target to get rid of the exportable surplus, but a slowing of exports in November because of Brexit and political uncertainty, reduced that likelihood.

This was, in part, due to the wet autumn reducing winter wheat planting and with a potential deficit in 2020-21, this pushed up new crop prices which, in turn, pulled up old crop prices. That made old crop wheat uncompetitive for export.

As a result, just 742,000 tonnes of UK wheat have been exported so far this season. There remains more than 2m tonnes for other use, or export for the remainder of this season and a continued lack of export tonnage is giving concern for both old and new UK wheat prices.

This could all change as we go forward to this year’s 2020 harvest with a lot smaller winter wheat acreage, which could see a domestic deficit of wheat and possible import requirement. This prospect has seen the November, 2020, UK feed wheat futures rising, but let’s not forget last year’s high stock levels which have not been exported.

The expectation is for that is that it will ‘replace’ a lower, expected wheat harvest later this year of around 1.64m ha and production of just over 13m tonnes. That’s down by more than 3m tonnes from this past year, so there’s every chance of some kind of balancing act.

That’s also the case in other EU-28 countries, with France in particular suffering from the poor autumn planting season, so for the EU, wheat production is forecast to be around 140m tonnes, or 6m tonnes less than in 2019 harvest.

The French factor in that is that its area is down 19% year-on-year at 4.47m ha, which is a 19-year low. The French are also having export problems at present with ongoing strike action meaning that ships in French ports, with more than 500,000 tonnes of capacity, have not been loaded.

Feed barley exports have continued but at a pace too slow to clear the large barley surplus, even though feed barley prices are competitive enough for exports to take place. A lift in wheat futures this past week, supported feed barley futures as well and some recent export demand has helped also – that’s due to competitive freight rates to move barley to mainland Europe.

New crop feed barley prices are at a large discount to wheat as a result of a possible large spring barley planted area to replace the intended winter wheat crop. But if the weather takes a turn for the worse and we get a poor spring sowing period, then growers are not inclined to sell forward in case they don’t get the crop sown.

Earlier this month, UK rapeseed prices rose by £7 per tonne since just before Christmas – partly due to sterling easing and to smaller US soyabean stocks, which stand at 96.8m tonnes, or 23.6m tonnes less than last year.

There’s also tighter supplies of rapeseed in the EU following low 2019 crop production figures and prices were also supported by the recent US-China trade deal to buy a large tonnage of US soya. On the flipside of that is that, with the US crop not being as big and Brazil having a good soya harvest of around 125m tonnes, this could result in China turning to there for soya.

That’s a move that could result in oilseed markets easing if China goes elsewhere other than the US to purchase supplies. In fact, that spectre seems to have hit the market and UK rapeseed prices fell back this week by around £10 per tonne and the Brazilian soya market eased back by 2.5% due to the uncertainty of the China-US deal taking place as planned.