The report says world wheat supplies remain tight, with 2007-08 world carryover estimates slipping from July’s 117 million tonnes predicted to an estimated 115mt.

AWB WA grain manager, Matt Rigg, said the critical low level of stocks was one of the main reasons for prices rising so high.

We started the marketing year with tight global wheat and coarse grain stocks and it's gone downhill since then, Mr Rigg said.

“We’re now at a point where global stocks are at the tightest point they’ve been in during the past 30 years," he said.

"And now US wheat stocks are approaching the same low levels seen back in 1996-97.

“As each producer approached harvest, their estimated crop size has been reduced, with the one notable exception being the US corn crop.

“Looking at wheat, the market was turning towards the Southern Hemisphere crop to relieve supply concerns.

“That hasn’t happened, with our crop estimates fast falling in most states.”

Mr Rigg said WA’s supply had become a critical ingredient in the world demand scenario this year because of the reduced global supply.

“The size of WA’s crop is very important and Australia as a whole is the same,” he said.

“At the moment, further cuts of just 1 million tonnes globally are significant.

"In WA alone, our feel is that's how much the WA crop alone has fallen over the last two-three weeks.”

The International Grains Council has predicted that global supply will fall short of demand by 7mt in 2007-2008, our of an anticipated global harvest of 607mt.

In response, import-dependent countries, such as Japan and Taiwan, have started buying up vast quantities of wheat, driving the price to an all-time high. (See separate story).

Food industry groups anticipate the higher prices will be felt by consumers, not only those buying wheat products but also those buying meat, eggs and dairy, as the price of animal feed is rising so sharply, too.

The surge in wheat prices has also added fuel to the debate over the potential perils of the booming biofuels industry.

Critics have accused biofuels of diverting critical food resources toward fuel production.

Those critics say that in effect, this change in the use of grain is effectively prioritising the fuel of the rich over the lives of the poor.

SOURCE: Farm Weekly, WA, September 13