Global wheat markets are expected to fall into an 18 million metric ton deficit this year as soaring prices fail to dampen demand, figures from the U.K.'s Home Grown Cereal Authority show.
World wheat production is expected to fall to 643 million metric tons, 29 million tons lower than previously hoped, while demand is expected to stay relatively robust at 661 million tons, senior analyst Jack Watts told the HGCA conference in London.
However, significant global stocks - particularly in the U.S., which holds 13% of the world total - are expected to cushion this year's deficit and protect against a repeat of the 2007-2008 food price boom, Watts said.
Concerns that the world may face a repeat of the price spike of two years ago have mounted after a surge in grain prices, sparked by a ban on grain exports from Russia and weather problems in other major exporters, sent food prices to a 25-year high in September, according to the United Nation's Food and Agriculture Organization Price Index.
"On paper at least the U.S. can cope with this demand but we don't know how logistics have changed" since 2007 when the U.S. stepped up exports to fill a shortfall in global grain production, he said.
This year, the U.S. is also expected to step up exports to fill the world's supply gap, although overall world trade is expected to fall seven million tons to 119 million tons.
The recent surge in wheat prices, which have seen futures on Paris's NYSE Liffe exchange increase by 60% to near 2.5-year highs last month, has also made U.S. exports more competitive on the world stage despite suffering from a $12 disadvantage from freight rates, said Watts.
"The world hasn't run out of wheat, it's just that a lot of wheat is in the wrong place," he said.