Wheat prices rose Monday after falling almost five per cent last week and despite estimates world wheat stocks are at all-time highs.

Wheat for March delivery settled up 1.8 per cent at $6.41 US a bushel on the Chicago Board of Trade.

Canada is the world’s third largest wheat exporter, behind the U.S. and France, shipping about 17.5 million tonnes annually.

The U.S. Department of Agriculture, whose estimates are taken as a world benchmark, on Thursday projected global wheat stocks would reach 213.1 million tonnes by the close of 2011-12, an increase of 3.1 million tonnes from its projection the previous week.

(USDA)

“A couple years ago, drought in Eastern Europe severely limited the grain harvest; but since then, it certainly looks like silos have been more than replenished,” ATB Financial economist Will van’t Veld said in a commentary.

The USDA revised its estimate of stocks in Kazakhstan, the world’s number seven exporter, where wheat consumption had declined in the previous year.

Higher wheat production for the current crop year in India, Morocco and Kazakhstan also helped push expected wheat stocks higher, van’t Veld said.

Despite the record inventories, prices are down only marginally from previous highs caused by the drought.

Whether prices slide, van’t Veld said, may depend on Eastern European weather.

Low temperatures there recently are causing new concerns about their effects on next year’s crop.

“Even if weather conditions in Eastern Europe improve, Western Canadian wheat is likely sheltered somewhat from the higher inventories,” van’t Veld said, as “spring wheat grown on the Canadian prairies has tended to be priced at a premium.”