At first glance, there seems good reason to think the latest food price panic has well and truly been put to rest: Farmers are expected to reap record global grain harvests; wheat stocks will rise to their highest in over a decade; and corn and soybean prices are down almost a quarter from their peaks.

Farmers and analysts, however, say it's still far too early to get complacent on supply. Global inventories remain far below historical norms relative to demand; China's emergence as a bigger market force has added uncertainty to the outlook; and above all the La Nina phenomenon is again gathering steam.

On Friday, U.S. Department of Agriculture predictions for a further loosening of the global grain balance added to optimism among consumer nations that the worst of the price spike may be past, painting a more benign picture for everything from global inflation to meat-packer revenues.

Yet, farmers warn the wild ride may not be over yet. Prices may now be at their lowest in more than a year, but harvests are still a long way off, and poor weather has repeatedly crushed their dreams of large crops in recent years.

"There's always caution when you get long-term projections," said Dean Stoskopf, who farms about 4,000 acres of wheat, sorghum, alfalfa and grass in central Kansas. "There are a lot of factors that can change."

Chief among threats to global production is La Nina, a phenomenon linked to unusual weather events across the globe. It was blamed this year for causing relentless heat and dryness that baked fields in the U.S. Plains and for heavy rains that damaged crops in Australia.

After briefly subsiding this summer, La Nina has re-emerged and could have a significant impact on global grain production if it persists into next summer, said Drew Lerner, president of World Weather, a private forecaster. It's too early to know exactly how much it will affect crops because forecasts are only good about three months ahead of time, he said.

If La Nina persists next year, states including North and South Dakota and Minnesota could be too dry during important periods of development for corn and soybeans, Lerner said.

"The big unknown is La Nina. How long will it last?" Lerner said.

Outside the U.S., a strong La Nina could keep conditions too dry in the Black Sea region and spark renewed dryness in Brazil and Argentina, major exporters of soybeans and corn.

Some traders on Friday said the USDA was overly optimistic in keeping its estimate for Brazil's soy crop at 75 million tons. Brazil's government crop supply agency, Conab, on Thursday pegged output 5 percent lower.

"We're throwing numbers around here that are more easily said than done sometimes, especially in a La Nina year," said Jim Gerlach, president of A/C Trading, a brokerage.

The weather has assumed an increasingly important role in global grain production following a string of extreme events in recent years. A historic drought that slashed grain output in Russia in 2010 was followed by a heat wave in Argentina and then this year's drought in the U.S. Plains.

'HIGH' STOCKS LOW BY SOME MEASURES

Even after over a year of high prices helped expand acres and rebuild inventories, the world remains relatively poorly prepared to cope with another unexpected shortfall.

Global inventories of all types of grain are expected to rise 1.3 percent next year, and will have rebounded by just over a third from the 2007 low, according to the USDA.

But demand too has risen. Measured as a percentage of annual consumption, stockpiles next year will reach just over 20 percent of demand -- and far short of the nearly 30 percent ratio that prevailed in the 1980s and 1990s. It's even lower than the 22 percent coverage ratio two years ago.

Stocks of wheat and rice are substantially more comfortable than they were three or four years ago, just before the 2008 price spike, but users of corn, in particular, remain on edge about the potential for supplies to fall short of expectations.

Globally, corn stocks are forecast to reach just 14.6 percent of demand -- the lowest rate since 1974, and half as much as just a decade ago, the data show.

U.S. supplies are historically low even after the USDA raised its forecast for inventories as of August 31, 2012, by 0.6 percent from November to 848 million bushels. That's down 25 percent from inventories at the end of August 2011.

"USDA did add a little cushion to the pile," said Rich Nelson, director of research for Allendale, "but this is still a very tight situation."

CHINA FACTOR

China is another wild card.

U.S. government and private forecasters expect the Asian nation will produce a bumper corn crop. However, the secrecy of China's government and the sheer size of the country make it difficult for anyone to get a good handle on the true size of the harvest.

The USDA raised its estimate for China's crop 4 percent from November to a record 191.8 million tons, well above the 167 million tons predicted by the U.S. Grains Council in October.

An overstated harvest could mask China's need to import corn, meaning the country could take more grain than expected off the world market.

China's importance to global food markets has increased as it recently re-entered the market after being absent since the mid 1990s. Some analysts predict China will become a consistent net importer for years to come as it attempts to replenish corn stockpiles depleted by increasing demand for meat from livestock fed with the grain.

"Good numbers are hard to come by," said Wendell Shauman, chairman of the grains council.