Surplus wheat stocks declined under the 1985 Food Security Act as exports expanded due in part to the export enhancement program and reductions in the loan rate. Cutbacks in wheat production and recent droughts in key producing areas further reduced wheat stocks and increased prices. Although burdensome stocks could easily return, there is also the risk of shortage and high prices if additional production shortfalls and demand increases occur in the near future. Exports will likely be the main source of demand growth for U.S. wheat. However, world trade is not expected to match the sharp expansion of the 1970's and competition among the major exporters may intensify. Issues for 1990 farm legislation include loan rate and target price levels, the level of farm program costs, planting flexibility, and the future of the export enhancement program.