February 2, 2009

Global wheat production in 2009-10 may fall about 5.4 percent from a record 687 million tonnes last year, as farmers shift attention to other crops, according to the International Grains Council (IGC).

The 2009-10 wheat crop would fall to 650 million tonnes, with the largest declines to be seen in the EU, Russia, Ukraine, China and the US, said the IGC.

The lower production is likely to support forward grain prices, but traders warned that near-term prices would remain under pressure from the large inventories built from the 2008-09 world bumper harvests.

Traders also said the ongoing credit crisis would also force wheat importing countries to buy on a hand-to-mouth basis, reducing demand.

"While the immediate supply and demand outlook for grains remained generally bearish, with global stock forecasts mostly adjusted upwards, increasing concerns about South America's crops and continued firm international demand for wheat attracted buying interest in futures markets," the IGC said.

The organisation also said low wheat prices and high input costs such as fertilisers will cut global wheat acreage by 1 percent.

"Although conditions in the northern hemisphere are generally favourable, production is likely to fall sharply," the IGC said, adding that overall the global wheat output would be well above average in the next season.