According to the latest Grain Market Report of the International Grains Council, world wheat stocks at the close of 2009-10 will reach the largest total since the 21st century began. The I.G.C. forecasts stocks a year hence at 174 million tonnes, up 13 million from a year earlier and 56 million, or 47%, more than the recent low at the end of 2007-08. Grain-based foods executives surely recall that the latter low coincided with record high wheat prices — twice current levels — and challenging volatility.

As comforting as that large increase in global wheat carryover may be to wheat flour buyers, it is essential to examine variations among major countries to understand why great caution is advised. In the case of the United States, the outlook is for a modest carryover rise, up 3% in 2009-10 and 12% above the 2008 low. The five major wheat exporting nations combined will contrarily experience an 11% carryover cut in 2009-10 and will have only slightly more than in 2008.

This means that the expansion in global wheat stocks is occurring in countries that will not weigh to a great extent on prices, at least as directly as U.S. or major exporter stocks would. The I.G.C. reveals that most of the wheat stock gain is in two countries, China and India, where domestic grain consumption has been rising. The I.G.C. forecasts China’s wheat stocks at the end of 2009-10 will reach 55.2 million tonnes, up 24% from a year earlier and accounting for nearly a third of the global total.

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