Hungry world eyes onset of U.S. wheat harvest

By Carey Gillam

NORWICH, Kansas (Reuters) - Kansas wheat farmer Arland Stephens has his shiny red combine ready to roll.

Oklahoma grain dealer Joe Cullins is busy contracting semitrailer trucks needed to haul millions of bushels of hard red winter wheat -- America's main bread-making wheat -- in from the countryside. And in Texas, the golden kernels are already stacking up in storage bins.

The 2008 U.S. wheat harvest is under way, and this year's harvest marks not only the end of another growing season for a key U.S. crop but also the arrival of a short-in-supply food staple demanded by a hungry world.

Adverse weather could still damage crop prospects; farmers know too well not to count on their bushels until they are in the bin. But the U.S. Department of Agriculture predicts that U.S. farmers this year will bring in 1.78 billion bushels of winter wheat during a summer harvest that stretches across more than 30 states. Harvesting of spring wheat will follow for a total of 2.4 billion bushels expected for 2008/09, 16 percent more than a year earlier.

Indeed, the United States, the top global exporter of wheat, is among the first of a group of major exporting nations to begin replenishing supplies for world wheat millers and bakers. The harvest this year is critical as world supplies have dwindled so low that sharp price increases and food shortages have hit markets around the globe.

"We're watching it very carefully. We've got extremely low stocks right now and there is no room for error," said American Bakers Association CEO Robb MacKie. "Our hope is the crop will be strong and the quality will be good."

CAN'T COME TOO SOON

Following the United States, Canada, another of the world's largest wheat exporting nations, will begin cutting its new wheat crop in August, while Australia and Argentina -- also key exporters to the rest of the world -- expect to begin harvesting in October.

Together the four are projected to produce 129.1 million tonnes of wheat this year, about 20 percent of the global total.

Big wheat crops and exportable supplies are also expected in Russia, Ukraine and Kazakhstan. The biggest producers in the world -- the European Union nations, China and India -- consume most if not all of what they produce.

Overall, USDA has forecast world wheat production at a record 656 million tonnes in 2008/09, up 8 percent from a year earlier.

The harvest can't come too soon. After poor production last year in the United States, Australia and elsewhere, global wheat supplies are at their lowest levels in roughly 30 years and are seen remaining tight amid increased consumption, according to a USDA Foreign Agriculture Service report issued this month.

"The concerns about food shortages ... are real. We have a lot of concerns," said Betsy Faga, president of the North American Millers' Association.

This year will mark only the first time in the last three years that production exceeds global consumption which is projected at 642 million tonnes. A series of big wheat crops will be needed to alleviate a continuing supply squeeze.

"It's too early to exhale," said Alan Tracy, president of U.S. Wheat Associates, a government- and industry-funded group that markets U.S. wheat supplies to foreign buyers. "It all depends on how production comes together around the world. That will determine whether we get to the point where we can breathe more easily about supply."