Wheat markets around the world have spent much of 2011 so far dealing with what the normally reticent International Grains Council (IGC) called “huge price swings.”

“After nearing the peaks last seen in 2008, large-scale speculative selling of futures contracts in the second week of March resulted in a $50 drop in export prices of wheat and maize, followed by a renewed surge in values, recapturing a sizeable portion of earlier losses,” the IGC said in its March Grain Market Report. “The fall was attributed to increased economic uncertainties following the political unrest in parts of North Africa and Near East Asia, with Japan’s earthquake and tsunami disaster also a factor.”

That drop was followed by a partial recovery in prices as the bullish underlying fundamentals of the market reasserted themselves. By mid-April, concern over dry weather in Europe, the U.S. and China was putting a strong bullish tone into the market.

Speculation surrounding Russia’s export ban has been a factor in the market. Broker Benson Quinn Commodities, part of Archer Daniels Midland, reported rumors that Russia might re-enter the market in the near future.

“The managing director of Sovecon, a Russian agricultural research and consulting body, was quoted in a news story that Russia would not be back in the export market until at least July after the current crops are more fully assessed,” the broker said in a commentary on the wheat market. “Even though prospects are much better than a year ago at this time due to the drought they were suffering, there doesn’t seem to be a hurry to begin exporting. Once they begin shipping wheat again, current estimates would put the available amount of wheat to be exported between 5 and 10 million tonnes in 2011-12 season.”

In its latest monthly report, Rabobank noted that wheat had been supported by corn and suggested that there could be increasing use of wheat to replace corn in feed as the old crop prices of the products trade at parity, the first time nearby corn and wheat have traded at parity for 15 years.

“We expect further upside in the short term with the wheat market direction set to continue tracking corn’s lead in the front months,” it said. The bank’s analysts also predicted that mounting new crop production risks for premium quality wheat will move already wide quality spreads higher.

“Very dry conditions in the Plains are impacting the HRW crop, and little relief is expected in the medium term forecasts,” they said. “The U.S. Department of Agriculture (USDA) reported 36% of the winter wheat crop was considered poor/very poor, one of the worst ratings ever at this stage of the season. It is likely some yield reduction has already occurred.”

The British Home Grown Cereals Authority (HGCA) came up with a list of factors affecting the new crop around the world.

“In the E.U., winter wheat is in satisfactory condition but dryness in NW/central countries is holding back spring crops,” HGCA said in its latest market report, citing a crop estimate from French analysts Strategie Grains, which left the E.U.-27 2011-12 total unchanged at 135.2 million tonnes, up from 126 million in 2010-11.

“In Russia, planting continues only slightly late despite wet weather, and the Ukrainian crop is currently reported in fairly good condition,” the HGCA said. “U.S. wheat is in need of rain with only small amounts expected this week while in maize regions forecast showers raise concerns over delayed plantings.”

In its latest World Agricultural Supply and Demand Estimates report, the USDA had higher beginning stocks mostly offset by lower world production. It now puts the 2010-11 world crop at 647.18 million tonnes, compared with its previous estimate of 647.6 million and 683.81 million in 2009-10.

“Production is lowered 1.3 million tonnes for Egypt as the latest reports indicate a sharp year-to-year drop in yields as unusual, early season heat affected pollination and reduced grain size,” it said. “Production is raised 1.1 million tonnes for Iran on higher area.”