World wheat production to decrease

World wheat output is currently expected to fall short of demand for a second successive season due to weather issues that remove hopes for crops in major producers in Europe and the US, the International Grains Council (IGC) said on Tuesday (Jun 7).

In a special report to coincide with the intergovernmental organisation's annual conference, the IGC reduced its forecast for world wheat production to 663 million tonnes, leaving a deficit of four million tonnes against consumption of 667 million tonnes.

Much of the downgrade was down to waning hopes for output from France, Western Europe's largest producer, where wheat production, including durhum, is expected to total only 35 million tonnes, four million tonnes lower than earlier predictions.

Similarly, supplies are expected to remain tight in corn markets, as output is expected to hit only 843 million tonnes, down from a previous forecast of 848 million tonnes, against consumption of 850 million tonnes due to delays in plantings from the world's biggest exporter, the US.

"The current higher level of grain prices reflect an increasingly tight demand and supply situation," IGC executive director Etsuo Kitahara told the conference. "We expect a further reduction in carryover stocks in 2011-12."

The situation is particularly tight in exporting countries, where rapid sales last year in the wake of Russia's ban on grain exports have drained inventories. The IGC forecast that world grain stocks will fall to their lowest level in 15 years at 105 million tonnes, down six million tonnes from its May prediction.