It is commonly-accepted that public stocks reduce private stocks. In contrast, empirical estimates range from no displacement to 100 percent displacement. Utilizing the concept of options, a conceptual model was developed. It implies the displacement effect is nonlinear, decreasing as public stocks increase. Displacement reaches zero when public stocks are large enough to cover all shortfalls in quantity demanded at the public stock release price. In addition, the displacement effect depends on the slope parameter of the commodity’s demand equation, the probability distribution of price, and the relationship between market price and public stock release price. A bootstrap regression analysis of carryout stocks of U.S. wheat from the 1953-54 though 1971-72 crop years was conducted. Consistent with the conceptual model, the displacement effect decreased as the amount of public stocks increased. Zero displacement was reached when public stocks equaled 100 percent of annual consumption. The displacement effect of the first unit of U.S. wheat public stocks did not differ statistically from 100 percent. While this analysis finds that the displacement of private stocks is a substantial cost of a public stock policy, it also suggests that the accumulation of public stocks can enhance total stocks, especially if the country is willing to accept the large private stock displacement cost of the first units of public stocks. Thus, the policy decisions regarding public stocks are more interesting than if the displacement of private stocks by public stocks is either none or 100 percent.