March 8, 2013

Global wheat crop may rise 4.3%

As European farmers expanded acreage while yields rebound in Russia, the world wheat production may climb 4.3 % from the previous season, reaching the second- highest on record.

World output may total 690 million tonnes this year, compared with 661.8 million tons a year earlier, the Rome-based Food & Agriculture Organisation (FAO) said on Thursday (Mar 7) in an online report. The harvest would be second only to the 2011 record. Wheat planting in the EU may be about 3% bigger than a year earlier and weather conditions have been "generally favourable." Ukraine may also see a "large recovery" in output after satisfactory winter conditions, the FAO said. Russia and Eastern Europe had dry weather last year.

"We should have a season ahead of us that could be a little more comfortable balance than the season in 2012-13," Abdolreza Abbassian, an economist at the FAO, said in a telephone interview before the report. Russia and former Soviet Union countries "had a particularly bad year in 2012, so the expectation is that they will have a recovery. The weather situation has been better so far."

Wheat futures rose as much as 0.9% on Thursday to US$6.8975 a bushel on the Chicago Board of Trade, after sliding to an eight-month low on Wednesday (Mar 6). The grain, the best performing commodity in 2012 on the Standard & Poor's GSCI gauge of 24 raw materials, is down 11% in 2013. In Paris, milling wheat futures have dropped 6.5% this year on NYSE Liffe.

China and Pakistan may have record wheat crops in 2013 and India is set for a "bumper harvest," the FAO said. Production in the US, the world's largest wheat exporter, may drop by as much as 6% because of drought in the southern Great Plains. Australia also faces uncertainty before planting begins in April because hot weather has reduced soil moisture.

Corn production in Brazil in 2013 may be 9% higher than a year earlier because of ample rainfall, allowing planting of the second-season crop to progress under favourable moisture conditions, the FAO said. Argentina's crop may rise to a record 25.5 million tonnes as yields recover from drought in the previous season, making up for an 8% drop in planting. More rain is needed in the country to maintain yields.

Corn production in South Africa may be near a record at more than 13 million tonnes, the FAO said.