The world wheat market is certainly at the whim of the weather right now.
Futures markets have bounced sharply off an eight-month low set early last week as concerns for the state European Union (EU) winter crop start to outweigh those of the Russian crop.
As the world emerges from the global coronavirus shutdown, northern hemisphere weather - especially in the EU, Russia and Ukraine - will most likely be the key wheat market driver in the next six weeks.
Buyers supposedly came back into the market based on discussions about reduced production in Russia. But most analysts appear to be holding their estimates firm in the 75-77 million tonnes range, which is well up on last year.
The winter wheat areas have received some rainfall in recent weeks and are holding production, but the spring wheat areas - particularly Siberia - appear to be suffering from lack of moisture, and the 14-day forecast is not favourable.
There has been very little talk about increasing production concerns across many parts of the EU.
The newswires tend to focus far too intently on Russian crop prospects these days, as it is the world's biggest exporter of wheat and tends to set global export values.
Interestingly, with restrictions on Russian wheat exports for the past two months of the current marketing year, the EU has usurped its crown for the 2019-20 season. Its exports have passed 35 million tonnes, with six weeks of the old crop year remaining.
Large swathes of western and central Europe have received insufficient spring precipitation to replenish soil moisture levels as the crop moves into its reproductive phase - the peak water use growth stage.
Daytime temperatures have also been above average and radiation levels have been extremely high. Consequently, crop biomass accumulation has slowed considerably and crop conditions are generally worse than in 2019. Also, many spring crops were sown into inadequate moisture and germination has been poor.
The forecast for dryer than average conditions for many parts of France, Germany and Poland for the next couple of weeks will undoubtedly stress the crops in some of these regions.
There is some rain forecast for these nations, but it is much less than what is being lost to evapotranspiration and much more is needed in the next few weeks to maintain yield potential.
Romania and Bulgaria appear to face serious production losses as drought conditions persist.
Soil moisture is so poor in some areas of these countries that crops are reported to be stunted and showing signs of wilting and early leaf senescence. No amount of rain will prevent severe production losses in the affected plants.
While not as acute, there are production issues in Austria, Slovakia and the Czech Republic. These are mainly soil moisture deficits and daytime temperatures of up to 2°C above the long-term mean.
This is hampering winter crop development and reducing yield outlook below the five-year average.
European crop monitor MARS estimates the new crop milling wheat yield will average 5.72 tonnes per hectare, compared to the 2019 average crop yield of 6t/ha.
This is below April's forecast of yields of 5.87t/ha and is almost 1 per cent below the five-year average of 5.77t/ha.
Durum wheat yields were also predicted to be lower at 3.38t/ha, compared to 3.47t/ha last year; 3.43t/ha last month and a five-year average of 3.49t/ha.
These yield estimates would mean a total EU wheat crop of about 139 million tonnes, which is 4 million tonnes lower than last week's forecast from the United States Department of Agriculture (USDA) of 143 million tonnes - and 16 million tonnes below the 155 million tonnes produced in 2019-20.
Contrary to some news reports last week, the window for serious damage to the northern hemisphere crop is still wide open.
All the major crop failures in Russia in recent years have been as a result of weather problems in June, July and August. This means there is still sufficient time for production prospects to worsen - or improve.
In last week's global supply and demand update for the USDA, total 2020-21 wheat production in the seven major exporters was estimated to be one million tonnes higher than last year at 378 million tonnes.
The update said lower production among northern hemisphere exporters of 10 million tonnes was more than offset by a 12 million tonnes production increase by the southern hemisphere exporters - Australia and Argentina.
In other words, the global wheat balance sheet is relying heavily on an increase in southern hemisphere production.
The challenge is that the Australian and Argentinian winter crops are still being sown and have the entire production cycle ahead of them. Grain output won't hit the export market for another six months.
The EU wheat crop estimate is much bigger than most of the European trade is forecasting - and the USDA report had the combined Russian and Ukraine wheat production pegged at 105 million tonnes, which also appears to be on the optimistic side compared to estimates from several industry pundits.
The wash-up here is that the EU, Russian and Ukraine winter crops need rain, and they need it quickly. Well above average precipitation, coupled with favourable crop conditions, is required through to harvest for current yield estimates to be maintained.
The big unknown in the whole equation is what impact has the coronavirus had on global wheat demand?
If demand recovers quite quickly, then further supply issues will be bullish for new crop values.
If there has been some severe erosion of global wheat demand in the 2020-21 marketing year - which is the most likely scenario - then the market can absorb further northern hemisphere production issues with minimal upward pressure on price.
If the EU and/or Russian 2020-21 winter crop production stabilises, or surprises to the upside, then last week's futures market low will likely be tested as the new crop harvest approaches.