Global wheat output to fall by 7 million tons in 2010

ROME (Commodity Online) : United Nation's Food and Agriculture Organisation said global wheat crop is to fall by more than 7 million tonnes this year as poor prices turn farmers off the grain.

The global wheat harvest will come in at 675m tonnes this year, below last year's level and the record 683.8m tonnes set in 2008, FAO said in a report.

Production in North America is set for a significant decrease, dented by a slump in sowings by farmers deterred by the prospect of weak returns.

Downward pressure stemming from ample export supplies and prospects for large crops continued to weight on international cereals prices, the report said.

Crops in Morocco and Tunisia, which enjoyed bumper harvests last year, have suffered from lack of moisture, while Black Sea production is also set to decline, the FAO added.

However, the declines will be offset by an increase by a larger harvest in the European Union, where plantings rose in some major producing countries and weather conditions have been generally favourable so far.

Expectations of a rising EU harvest tally with those from other analysts, such as Paris-based Strategie Grains, which has also forecast a rise in production as farmers shift from barley, which is losing intervention support this year.

Indeed, world production will remain well above the five-year average this year, despite its decline, the FAO said.

The organisation's forecast for the decline in global output is marginally short of that estimated by the US Department of Agriculture, and less than half the fall predicted by the International Grains Council.

However, the USDA and IGC forecasts are for the 2010-11 marketing years, which typically start on July 1, while the FAO works on calendar years.

Indeed, the FAO's forecast of a 1.9% rise to 1.14m tonnes in coarse grain production includes the strong early-2010 corn harvests in Argentina, Brazil and South Africa, which have been boosted by regular rains.

In South America, harvesting of the main season crops is underway and output is expected to recover strongly from last year's drought-reduced level, the FAO said.

The IGC, which places these South American and South African harvests in 2009-10, foresees a smaller rise in coarse grain output, of just 1m tonnes to 1.105bn tonnes.

The USDA has pegged the world coarse grain harvest at 1.13bn tonnes in 2010-11, a rise of 27.4m tonnes, nearly half of which represents hopes of a sharp rebound in Chinese corn production.