World wheat production to pressurise prices

World wheat production this year will not be as high as expected, but supplies will still be more than enough to meet demand and pressurise prices, analysts said.

The USDA in its July supply and demand report raised its 2009-10 production forecast to 656.48 million bushels. Higher production by the US and FSU-12 countries more than offset reduced estimates for Argentina, Canada and the EU.

But estimates for important wheat exporters Argentina, Russia and also Australia, are expected to drop in the coming months due to weather problems, analysts said.

The trend in world production estimates may start turning downward with fundamentals leaning toward tighten global ending stocks, said Dan Manternach, director of Doane Advisory Services.

The USDA reduced its 2009-10 world wheat ending stocks by 1.37 million tonnes to 181.28 million tonnes, ending a series of increases in ending stocks estimates.

But the world is nowhere near having a wheat shortage, which only occurs when ending stocks amount to less than a 90-day supply, Manternach said.

There are still plenty of wheat stocks out there to keep prices low, said Citigroup analyst Terry Reilly.

Citigroup estimated world production to reach 651 million tonnes, while AgResource Company forecast production to reach up to 644.5 million tonnes.