The U.S. Department of Agriculture last week projected world wheat production in 2008-09 at a record 656.01 million tonnes. The U.S.D.A. projection compared with an International Grains Council forecast issued two weeks earlier at 645 million tonnes. The U.S.D.A. had higher forecasts for the U.S., the European Union, China, Russia and Ukraine than the I.G.C. outlook. The I.G.C. was expected to make adjustments in its next forecast due toward the end of May to account for the larger-than-expected increased forecast for U.S. wheat production and developments in other nations.

The U.S.D.A. projected the 2008-09 world wheat crop to be 8% larger than that harvested in 2007-08. The department cautioned its forecasts were highly tentative given spring crops were only now being seeded in the Northern Hemisphere and Southern Hemisphere wheat won’t be harvested for several months. Nevertheless, grower response to all-time high wheat prices seemed impressive.

The largest increase from 2007-08 was projected for Australia. That nation endured a run of two drought-reduced crops, which helped precipitate the historic run up in world wheat prices. Recent rains there were favorable ahead of planting. The U.S.D.A. projected Australian wheat production in 2008-09 at 24 million tonnes, compared with 13.1 million tonnes in 2007-08 and 10.64 million tonnes in 2006-07.

The U.S.D.A. projected the U.S. 2008 wheat crop at 65.1 million tonnes, up 8.85 million tonnes, or 16%, from 56.25 million tonnes in 2007. The forecast was based on a winter wheat production forecast of around 48.4 million tonnes and a spring wheat crop of around 7.85 million tonnes, with the latter forecast based on U.S. producers’ spring planting intentions and trendline abandonment and yield for spring wheat.

The Canadian 2008 wheat crop was projected at 25 million tonnes, up 4.95 million tonnes, or 25%, from a year ago, as producers expanded planted area across the Prairie provinces and anticipated normal weather.

Major increases in production from 2007-08 also were projected for Russia and Ukraine. Among principal wheat exporters, only Argentina was expected to see a reduction in production in 2008-09. The U.S.D.A. projected Argentina’s crop in the upcoming year at 15 million tonnes, down from 15.5 million tonnes in 2007-08.

China’s wheat production in 2008 was projected at 109 million tonnes, up 3 million tonnes from last year. If the forecast is realized, the crop would be China’s largest since 114 million tonnes in 1999. China harvested its largest crop in 1997, at 123 million tonnes.

With world wheat production forecast to exceed world wheat demand (projected at 642.04 million tonnes in 2008-09) for the first time since 2003-04, world wheat stocks were projected to increase. The U.S.D.A. projected 2008-09 world wheat ending stocks at 123.99 million tonnes, up 13.97 million tonnes, or 13%, from 110.02 million tonnes in 2007-08.