USDA's Grain World Markets and Trade reports in their latest circular that there is normally a strong inverse relationship between international wheat prices and stocks held by major exporting countries because they are mostly available for export to the world market. Global wheat prices, as reflected by Hard Red winter (HRW), have nearly doubled over the last year. The surge was initially fuelled by smaller crops and export restrictions in some major exporting countries, then concerns over available supplies of milling quality wheat. Prices are reflecting other factors, including a tight U.S. corn market, poor winter wheat crop conditions in the Unites States, and political unrest in North Africa and the Middle East.
Exporter stocks remain relatively high and are boosted almost 4 million tons this month. In fact, they are estimated to be 55 percent higher than during the price crisis of 2007/2008. Stocks are up this month on more supplies from key Southern Hemisphere countries, namely, Argentina and Australia, and less import demand, particularly from Russia. U.S. stocks are raised on lower foreign demand ans a result of greater competition from Australia.