Global grain production estimated to take a downturn

Global production of grains is forecast to drop in the upcoming 2010-11 crop marketing year as farmers in many parts of the world choose to plant less grain in favour of other more economically appealing alternatives.

The Germany-based analytical firm F.O. Licht expects global grain production to fall 1.4% to 1.59 billion tonnes for the crop year ending June 30, 2011. The production figure includes wheat, corn and barley output forecasts.

Grain output is expected to be smaller than the previous two seasons when the global harvests were the most ever, but modestly higher than the four year average, the firm said. A harsh winter is also expected to affect yields in the upcoming crop year.

The mix of grain on the market will shift in the new season. Corn output is expected to increase, while wheat production will fall.

Global wheat production is forecast to drop 3.2% to 653.9 million tonnes in the 2010-11 crop year. Every major wheat-producing region in the world is forecast to produce less wheat except for the EU, where plantings increased, and South America, where Argentine output will rebound from the previous drought-devastated harvest, F.O. Licht said.

"In many places producers have chosen crops with better price potential than beleaguered wheat," the firm said.

Global corn production is expected to rise 1.1% to 795.2 million tonnes in 2010-11 due to a large crop in the US and increased plantings in other countries.

F.O. Licht expects any potential rise in grain prices will likely be capped due to large end supplies. "While general output is expected lower in the new season, large carryover stocks and the tumultuous economic recovery potentially impacting grain demand will temper any major price increases, as long as weather conditions remain average," the firm said.