In evaluating the USDA’s World Agricultural Supply and Demand Estimates report, the Earth Policy Institue said that world carryover grain stocks fell to 72 days of consumption, which they said is “uncomfortably close” to levels prior to 2007–08 food price spike that set off food riots across the globe.

According to the WASDE report, Earth Policy Institute said estimates for this year’s global grain carryover stocks have fallen to 444 million tons.

“This amount of grain remaining in the world’s silos and stockpiles when the next harvest begins is enough to meet 72 days of consumption,” according ot Earth Policy Institute.

“This drop in world carryover stocks of grain to 72 days of consumption is moving us uncomfortably close to the 64 days of carryover stocks in 2007 that fueled the 2007–08 spike in world food prices,” said Lester R. Brown, president of Earth Policy Institute.

According to Brown, a searing record heat wave, severe drought, and relentless wildfires in Russia and Central Europe have decimated the region’s harvests.

Brown said Russia’s wheat production is now estimated at 45 million tons, a 27 percent drop from last year. In Kazakhstan, he said the wheat harvest is down 32 percent to 12 million tons, and in Ukraine it is 17 million tons, 19 percent smaller than in 2009.

“On August 5, Russia announced that it was banning grain exports at least through the end of the year and requested that neighboring countries do the same,” Brown said. “Since these three countries typically supply a fourth of world wheat exports, wheat prices have risen along with the region’s temperature.”

Browin said Russia runs the risk of drought spillover into the next year if there is not enough soil moisture to plant the new winter wheat crop.

“With soils parched, planting time only days away, and not much rain in prospect, this is a growing concern in Moscow, and indeed in the world,” he said.

Brown said longer, more-intense heat waves and dangerous wildfires are consistent with projections for a warming world.

“Rising temperatures and food security do not mix,” said Brown. “The situation in Russia gives us a preview of what could be in store if we continue to overheat our planet. This should be a wake-up call for the world: to protect our food security we need to dramatically cut carbon dioxide emissions. We cannot continue to burn coal and oil with abandon and expect to have bumper harvests that can keep up with the record demand generated by population growth and the increasing use of grain to feed livestock and to fuel cars.”

For the US, the USDA reports that wheat ending stocks for 2010/11 are lowered this month as higher expected exports more than offset an increase in forecast production and lower projected feed and residual
use.

According to the WASDE report, production is forecast 49 million bushels higher mostly reflecting higher yields for durum and other spring wheat, especially in the Northern Plains. Winter wheat production is
also raised slightly as higher yields in the Northern Plains and Pacific Northwest more than offset reductions in the eastern Corn Belt. Feed and residual use is lowered 10 million bushels
as rising values have priced wheat out of feed rations.

Exports, according to the report, are projected 200 million bushels higher with declines in foreign production, particularly in the FSU-12, reducing global supplies and making U.S. wheat competitive in key Middle East and North Africa markets.

U.S. ending stocks are projected 141 million bushels lower from last month, and down 21 million from 2009/10, according to the report. The 2010/11 season-average farm price is projected at $4.70 to $5.50 per bushel, up 50 cents on both ends of the range.

According WASDE, world wheat imports and exports are reduced sharply as tighter supplies and higher prices reduce projected global consumption. Imports are projected 5.7 million tons lower as higher prices reduce demand in a number of countries.

“Exports are lowered 12.0 million tons for Russia partly reflecting the recent announcement banning exports through December,” the report said. “Also limiting Russia export prospects is higher expected wheat feeding with drought-reduced forage and coarse grain crops and policy goals aimed at increasing domestic meat production.”