Global harvest of wheat declines as the yields diminish to average

Australia’s government commodity forecaster said that the wheat crops worldwide will probably decline 2 % in the year starting July 1 as yields return to average after record production.

While the Canberra-based Australian Bureau of Agricultural and Resource Economics and Sciences said today that the harvests may drop to 682 million metric tons from 693 million tons as consumption gains 0.3 % to 681 million tons, and so the world wheat indicator price will drop 7 % to average about $275 a ton.

On the same regard wheat futures have tumbled 17 % in the past year as the global production and inventories headed for all-time highs and world trade surged to the second-highest level in at least in five decades, so Mike O’Dea – a senior risk manager at INTL FCStone Inc – said that the global stockpiles may reach 220 million tons in 2012-2013 from 213 million tons a year earlier.

Paul Morris -bureau executive director- said that “If we see supply increasing more strongly than what it has and stocks continue to rise, that will put pressure on prices”.

Abares joins the International Grains Council in predicting a decline in harvests in the coming year because of lower yields. The council expects global production to drop by 15 million tons to 680 million tons.

Wheat output in the U.S., the biggest exporter, may gain 6 % to about 58 million tons as yields recover, while China’s production may gain 2 % to 120 million tons, the bureau said in a report. The Russian Federation may produce 5 % more wheat at 59 million tons as output in Kazakhstan, the second-largest shipper in the former Soviet Union, slumps 31 % on a return to average yields.

The crop in Canada (WHETCA00) may be 2 % higher at 26 million tons, while production in the European Union may gain about 2 % to 140 million tons, according to the bureau.

Alison Watkins -chief executive officer of GrainCorp Ltd, eastern Australia’s largest handler- said that the global demand for grains may climb 50 % over the next 40 years, faster than forecast population growth of 40%.

The area planted to wheat in Australia, the second-biggest shipper, may decline 2.5 % to 13.7 million hectares (33.9 million acres) in 2012-2013 as farmers switch to barley and canola on better returns, according to Abares.

Output may drop 13 % to 25.7 million metric tons in the year from July 1, from a record 29.5 million tons a year earlier, the bureau said. Canola plantings may rise 4.8 % and barley sowings may gain 2.9 %.

Australia’s canola production may increase 5.4 % to a record 2.9 million tons and barley output gain 5.1 % to 9 million tons, Abares said. Wheat exports may total 21 million tons in the year from July, from a record 21.2 million tons a year earlier, it said, Australia is set to be the second-biggest wheat exporter in 2011-2012 after the U.S., according to the U.S. Department of Agriculture, as Bloomberg stated.

The area of Black Sea sown to wheat, coarse grains and oilseeds in Kazakhstan, Russia and Ukraine may increase by an average of 2 % a year to about 90 million hectares “over the medium term,” the bureau said, and between 11 million hectares and 13 million hectares of idle land suitable for cropping is available for expansion

The so-called free-on-board Gulf price of U.S. hard-red winter wheat may fall 7 % in 2012-2013, reflecting record world opening stockpiles and expected high global production, the bureau said. Global wheat stockpiles may total about 210 million tons in 2012-2013 as production exceeds consumption and as inventories in the U.S. rise about 10 % to 28 million tons.