November 7, 2011

Wheat growing conditions in the Northern Hemisphere for next year's harvest are generally favourable except for the US and Ukraine, which face dryness, the United Nations' Food and Agriculture Organisation (FAO) said.

Northern Hemisphere winter wheat is either being planted or is due to be sown in the next few weeks, the Rome-based agency said recently in a report.

Wheat prices are at similar levels as a year ago, meaning planting the grain may be "attractive" for farmers, according to the FAO. Wheat for July delivery is trading at US$7.0325 a bushel in Chicago, compared with US$7.6475 a bushel 12 months ago.

"The crop should remain an attractive option," the FAO said. "Farmers are expected to maintain, or even increase, the area under wheat."

World wheat production is forecast to rise 6% to 691 million tonnes in the 2011-12 crop year, the FAO said. It's too early to forecast the wheat area for the 2012 harvest, said Abdolreza Abbassian, a senior economist at the FAO.

Wheat planting may increase in the countries of the former Soviet Union as farmers seek to benefit from demand in the region following a "huge production shortfall" in 2010, the FAO said. Indications for sowing in the US suggest a "considerable increase," according to the UN agency.

Ukraine is facing "adversely dry" conditions, while prolonged dryness in the southern US is hampering fieldwork there, according to the FAO.

The EU wheat area is expected to be relatively unchanged amid competition from other crops, the FAO said. The outlook for India is "favourable," while persistent dryness in parts of China and severe floods in Pakistan's Sindh province could affect sowing there, according to the report.

The bulk of the Southern Hemisphere wheat crop is due to be harvested by the end of the year, the FAO said.

Prospects in Argentina have deteriorated "somewhat" because of dry weather, according to the report. In Australia, the outlook worsened for some parts in the east, while conditions in Western Australia indicate a "sharp recovery" from last year's drought in the region, the FAO said.