Unless there are clear signs of a major breakthrough in a post-Brexit deal between the UK and EU, most analysts predict that sterling will remain weak against other major currencies, including the euro, over the next six months.

That should help to underpin prices for some of our main farm outputs this winter, although it is having a negative impact on inputs such as feed grains and red diesel.

This week, sterling has been trading around the €1=£0.90 mark, and while the euro in itself is not a particularly strong currency, the weakness of sterling is being driven by current talk of a no-deal Brexit.

The warning coming from both EU and UK Brexit negotiating teams is that time is running out.

Following talks with UK Brexit secretary Dominic Raab this week, the EU’s chief negotiator Michel Barnier acknowledged that the original October deadline for a deal to be agreed could be set to slip.

“I’m not going to say October. A few days here or there, but certainly not later than the beginning of November,” he said. The date is important, as it is generally acknowledged that it will take around five months for national governments and the European Parliament to ratify any deal ahead of the UK exit on 29 March 2019.

With a number of UK government ministers warning about the prospect of no deal (perhaps partly to increase pressure on the EU negotiators), it is making financial markets nervous.

However, in the short term, if sterling stays around €1=£0.90 it will deliver a boost to local farmers by way of basic payment scheme and greening payments.

Only once since the new system was introduced in 2005 has the rate used to convert direct payments from euro to sterling been above €1=£0.90. That happened in 2009, and since then the conversion rate used has averaged around €1=£0.82, and fell as low as €1=£0.73 in 2015. Last year, sterling was also under pressure, and the rate used was €1=£0.89.

The rate used to convert payments to euro is average of the European Central Bank exchange rates for the month of September.

Read more

No-deal Brexit would put NI livestock sector in ‘serious jeopardy’

Free-trade deal still means borders