Global wheat production is projected to reach a record 656 million tons in 2008/09, while global consumption is projected to surge to 642 million tons, almost 22 million tons above last year. 2008/09 is expected to be the first crop in three years to exceed total consumption. Despite larger production, global stocks will remain at historic lows (only 2007/08 has seen lower stocks in the past 28 years), while global trade is projected to climb to a record 117 million tons. Both the growth in global trade and consumption come despite another year of high prices. Pent-up demand is expected to move back into the market as importing countries begin to replace stocks.

A key factor for the world wheat market is a rebound in the exportable supplies of several major exporters (Australia, Canada, EU-27, Argentina and the United States). In the EU-27, record planted acreage and ideal growing conditions propel the production forecast to a level not seen in 4 years and 20 million tons greater than last year. However, pipeline stocks are only rebuilding slightly as both internal and external demand are expected to remain strong. Exports are forecast to climb 6 million tons to 15 million tons, provided the Commission does not pursue any policies to restrict exports.

Argentine exports are forecast to remain steady depending on export policies. Canada is expected to expand shipments as production rebounds to a more normal level.

Big wheat crops are also expected in Russia, Ukraine, and Kazakhstan and exports for that region are projected to be a record. Russian exports are forecast at near record volumes, and will likely displace U.S. exports to key Mediterranean markets. While Ukrainian exports in 2007/08 were curtailed by export quotas to protect tight domestic supplies, a bumper harvest should alleviate that concern and provide much more grain to be exported.

Australian exports are forecast to jump on a recovery in production from the last two years of drought. However, that supply will not be available for another 6 months when the new crop is harvested. As always, there is uncertainty regarding the size of this crop and its progress will likely be a major factor for the global market.

North African and Middle Eastern imports are expected to rise by almost 6 million tons, driven by drought-impacted crops and a need to rebuild stocks. Traditional supplier, Syria, is expected to see exports fall by half as the crop shrivels. Importers such as Algeria, Egypt, Iran, and Iraq are all expected to import more from both the EU and the Black Sea regions, which have greater supplies and transportation advantages relative to Canada and the United States.

With greater supplies of feed-quality wheat from the Black Sea region available, markets such as EU-27 and Israel are expected to boost low quality imports. European Union import quotas for low quality wheat could be completely filled this coming year, as opposed to 2007/08 when there was a dearth of Ukrainian supplies during the second half of the season.

In the Western Hemisphere, import demand is expected to increase slightly. Brazil will likely seek to diversify its suppliers after Argentine policies disrupted trade. Venezuela is expected to increase its imports with much of the supply continuing to come from the United States. United States imports are estimated down from last year, as larger hard wheat crops reduce the need for imports from Canada.

Domestic: All classes of wheat saw extraordinary price surges in 2007/08 and the U.S. season average price forecast for 2008/09 is a record.

• Argentina is up 300,000 tons to 9.8 million on new information about year-to-date shipments.

• Canada is up 500,000 tons to 15.0 million because of continued strong shipment pace in the spring.

• Pakistan is up 1.2 million to 2.2 because of flour trade to neighboring countries.

• Russia is down 500,000 tons to 12.0 million because the export taxes imposed in January dampened demand.

• Egypt is up 500,000 tons to 7.5 million and Iraq is also up 500,000 tons to 3.5 million on the faster pace of tenders and purchases in the spring.

• Pakistan is up 700,000 tons to 1.7 million on expanded regional flour trade.