December 9, 2011


Global wheat crop seen 6.5% higher at record level



Global wheat output for 2011 is likely to increase by 6.5% on-year to a record 694.8 million tonnes, after bumper crops in Russia and Asia prompted a higher prediction from last month, the UN's food body said Thursday (Dec 8).


Despite prospects at the outset of the season not pointing to such strong growth, the Food and Agriculture Organization (FAO) said world production would be around 10 million tonnes above the previous high in 2009, as significant reductions in North and South American output were offset by a sharp recovery in former Soviet Union nations after drought last year.


South American crops were hit by prolonged dry weather conditions in Argentina and planting reductions in Brazil, with the US allowing relatively small coverage, although early indications point to a considerable increase in the country's wheat plantings for harvest in 2012.


The FAO said the crop should remain an attractive option for producers as wheat prices are similar to last year's levels and usage is expected to outstrip supply in 2011-12, meaning it expects farmers to maintain, or even increase, wheat's planted area.


The organisation marginally lowered its forecast for 2011 world cereal production, but said it still expects a record output of 2,323 million tonnes, an increase of 3.5% compared with last year.


Forecasts for coarse grains and rice production were reduced slightly, the former largely reflecting a downward adjustment for corn in the U.S due to adverse dry conditions in major growing areas, while the latter was due to a deterioration of prospects in Indonesia.


However, the FAO said world production of coarse grains in 2011 would be 1,147 million tonnes, a 1.9% increase on last year and "virtually matching" the record harvest in 2008.


The bulk of the annual increase was attributed to a strong recovery in Europe's production, mainly in the former Soviet Union countries which were hit by drought last year, while larger coarse grain crops were also forecast for Asia and South America.


Planting of the 2012 corn crop is already underway in the southern hemisphere, and the FAO said farmers in Argentina and Brazil are expected to sharply expand their sown area in response to strong demand and attractive price prospects.


Preliminary planting intentions also indicate a possible expansion in South Africa, the largest producing country in the continent.


The FAO said an important emerging feature is a sharp 8% increase in the use of wheat for animal feed, due to competitive pricing compared with coarse grains, and corn in particular.


The organisation said coarse grains use for feed is forecast to increase by only 0.5% worldwide, with a fourth consecutive season of contraction in developed countries - traditionally the biggest users.

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