Dec. 4 (Bloomberg) -- World wheat stockpiles will probably rise for the first time in four years in 2008-09 because of increased plantings, which may help push down prices, said Etsuo Kitahara, executive director of the International Grains Council.

Global inventories of the grain are forecast to increase from 110 million metric tons at the end of June 2008, according to the council. Plantings are expected to gain 4 percent from a year earlier as record prices encourage farmers to sow more, Kitahara said in an interview in Tokyo.

``Stockpiles are at a very low level,'' he said yesterday. ``For the next season I expect a slight addition to them,'' he added, declining to give a specific figure.

The price of wheat, used in food products such as bread as well as for animal feed, rose to a record in September, prompting companies including Kellogg Co. and General Mills Inc., the largest cereal-makers in the U.S., to increase prices. Global supply fell short of demand after weather damaged crops in countries such as Australia, Ukraine and Canada.

``A rise of 4 percent seems a conservative forecast for me,'' said Nobuyuki Chino, president of the Tokyo-based trading company Unipac Grain Ltd., in an interview. ``I expect a rise of 5 percent or more. If the weather is normal, supply will overwhelm demand, sending prices lower.''

Spring plantings in the northern hemisphere will see intense competition for land between wheat, corn and soybeans, Kitahara said, after farmers sowed more winter wheat this year.

``The current situation is like playing musical chairs with three crops trying to sit on two chairs,'' he said.

30-Year Low

Global wheat output lagged behind demand in 2007-08 for a third year, with inventories in the five top exporting countries declining to 26 million tons at the end of June, the lowest in 30 years, the council said in a report Nov. 22.

Growth in consumption of the grain may be curbed as rising prices spur a shift in demand from feed wheat to alternatives such as corn, sorghum and soybean meal, Kitahara said.

As wheat stockpiles increase, corn inventories may decline. World corn stockpiles as of June 30, 2009, will probably fall from an estimated 111 million tons a year earlier as farmers cut plantings of the grain to sow more soybeans, Kitahara said.

``Farmers will choose to plant a crop that will likely bring them most profit,'' Kitahara said. ``Looking at the current crop prices, corn-planted areas may fall.''

Global corn consumption is forecast to rise from an estimated 762 million tons in 2007-08 on demand for biofuel.

``Corn demand in ethanol production will continue to rise in the long-term, despite the correction recently, as the U.S. government keeps its policy of promoting the use of alternative fuel,'' Kitahara said.

Ethanol Output

U.S. ethanol output rose 1.6 percent from August to 441,000 barrels a day in September, and inventories climbed 12 percent to a record, according to the Energy Department. VeraSun Energy Corp., the third-largest U.S. ethanol producer by capacity, said Oct. 1 that it halted a 110-million gallon plant in Reynolds, Indiana, citing excess supplies.

Ocean freight rates to transport grains may decline over the next four years as the fleet expands, Kitahara said.

The volume of cargoes vessels can transport will rise by about 40 percent in the next four years from the current level, as newly built ships enter the freight market, he said.

``A correction in shipping rates is possible,'' he said.

The Baltic Dry Index, an overall measure of the cost of transporting commodities, has slumped 7 percent since reaching a record 11,039 points Nov. 13 amid expectations global economic growth will slow.

Wheat for March delivery gained 4.75 cents, or 0.5 percent, to $8.8150 a bushel at 5:15 p.m. Tokyo time today. The most active contract reached a record $9.6175 a bushel on Sept. 28.

The London-based International Grains Council is an organization representing exporting and importing countries.

To contact the reporter on this story: Aya Takada in Tokyo at atakada2@bloomberg.net

Last Updated: December 4, 2007 03:23 EST