Reviewing the ending stock balances for the world wheat market tells the story for why prices have hit highs. There is no wheat in storage. We are at all time lows with inventory fast approaching 100 million metric tonnes. Clearly, there is a greater risk premium in the wheat market because there is little room for error when the inventory levels decline.
Production has been up from last year but below the records set in 2004. The world will need continued good crops for more than a year to replenish the inventories, but wheat has to compete with other crops which are also at price highs. We will have to get used to this higher price range.
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