September 2, 2010

 

FAO sees lower world wheat harvest

 

 

The United Nations' Food and Agriculture Organisation (FAO) has revised down its forecast for global wheat production after drought slashed output in Russia.

 

The outlook for overall grain production was also cut.

 

The wheat crop will fall 5.1% to 646 million tonnes this year from 681 million tonnes in 2009, the Rome-based UN agency said in a statement on its website. The FAO raised its outlook for wheat use in Russia as local barley output slumps.

 

Russia's drought wiped out grain crops across 27% of the planted area this year, the agriculture ministry said August 27. The country has banned grain exports until the end of the year to curb domestic prices.

 

"Wheat markets remain tight but supplies are adequate," the FAO said. "Among the major cereals, wheat accounts for most of the cut in this latest forecast." Global cereal production will fall to 2.238 billion tonnes from 2.257 billion tonnes in 2009, the FAO said, reversing a June forecast that overall output of wheat, rice and coarse grains would rise to 2.28 million tonnes.

 

The FAO had already cut its outlook for wheat production last month from 677 million tonnes in June. In the latest report, the outlook for Russia's wheat crop was cut to 43 million tonnes from 48 million tonnes in August.

 

Production of coarse grains, which includes corn and barley, is forecast to rise to 1.125 billion tonnes from 1.121 billion tonnes last year, less than an increase to 1.131 billion tonnes forecast in June.

 

World cereal stocks at the end of the 2010-2011 crop year are forecast to slip 2.4% to 527 million tonnes from an eight-year high of 540 million tonnes, according to the report. The stocks-to-use ratio will slip to 23% from 24 %, the FAO said.

 

Wheat use is expected to rise in Russia on feed demand, as the country's barley harvest slumps 50%, according to the report. The wheat stocks-to-use ratio at the end of 2010-2011 is forecast to fall to 27% from 30% a year earlier. The FAO has lowered the outlook for wheat's stock-to-use ratio twice from 28% in August and 29% in June.

 

World trade in wheat is expected to slip to 119 million tonnes, down by three million tonnes from the previous forecast and compared with 126 million tonnes in 2009-2010. Wheat is the most-widely traded grain on international markets.

 

"The forecast for world wheat trade has also been lowered this month, mostly on higher international prices which may curb imports of wheat, especially for animal feeding," the UN agency said.