The wheat market is turning its attention to the upcoming winter wheat crop and conditions overseas look good for the most part.
Will Rutherford-Roberts, market analyst with StoneX, said forecasts calling for a moderate La Nina weather event in the last quarter of 2021 bodes well for Western Europe.
It will likely result in slightly higher than normal moisture for northern France and Germany and slightly below average conditions for south and central France.
Subsoil moisture levels are good coming out of the summer growing season throughout most of the wheat growing regions of Western Europe due to normal to above-normal rains.
With wheat prices on the MATIF exchange at their highest levels since 2012-13 and tight supplies in the top exporting nations, it is likely farmers in Europe will plant a lot of wheat.
Rutherford-Roberts is forecasting 65.46 million acres in the EU and the United Kingdom, the biggest crop in six years.
La Nina could cause dryness in eastern and southern Ukraine but the country had a wet summer and has good moisture reserves heading into the planting season.
The government of Ukraine is forecasting 16.55 million acres, a 10 percent increase over last year's levels.
Russia is the one major winter wheat growing region where farmers could cut back on last year's record plantings.
The forecast is for dry conditions in southern Russia, which could cause some establishment and development issues.
Farmers may also be reluctant to grow wheat due to high fertilizer prices and punitive government policies.
"Given the current levels of government intervention in the form of the export taxes, current expectations are that Russian planting area is set to decline for the 2022-23 season," he said.
Rutherford-Roberts said that in addition to the export tax there has been some talk of implementing an export quota later in the 2021-22 crop year to keep food price inflation in check.
MarketsFarm analyst Bruce Burnett doubts that will happen.
"I had heard rumblings about that but I don't know if (a quota is) going to be necessary," he said.
That's because the pace of Russian exports has been slow this year due to the tax, which has made Russian wheat less competitive in foreign markets.
But he noted that the government has used quotas in the past, so it is not out of the question.
"If the quotas did happen that would be a boost for the wheat market," said Burnett.
Rutherford-Roberts said it would push demand towards the EU but he thinks the EU would struggle to service that demand due to severe quality problems with this year's crops in France and portions of Germany.
Importers in Saudi Arabia, Algeria and China have already reduced their test weight requirements to allow French wheat to compete in those markets.
Burnett said that is a pretty good indication of how tight global wheat stocks have become in key exporting markets.
"Buyers are saying, 'OK, you can't supply it. What can you supply and I'll buy it?' " he said.
But he noted that there is a very large Australian wheat crop on the way and what appears to be a reasonable crop in Argentina as well. That will help alleviate some of the supply problems.
Both analysts said the wheat market will ignite if there is any weather problems in the major winter wheat production regions.
Burnett said it will probably take two years to get the wheat market back in balance because demand has been very strong despite the high prices.
"We do need to produce more wheat," he said.