World wheat forecast raised on higher Canadian, Argentine crops

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Dec 11 : World wheat production will be higher than the forecast a month ago as Canada and Argentina will harvest bigger crops, the US Agriculture Department said. World production will be 588.6 metric million metric tonne, up 0.3% from the 586.8 million forecast a month ago, the USDA said.

Canada will harvest 27.3 million tonne, up 3.8 %, and Argentina’s crop will be 14.2 million tonne, up 7.2%, according to Monday’s report. The estimates for the US and Australian harvests were unchanged. World inventories of wheat before next year’s harvest on June 1 will be 120.7 million tonne, up from the 118.8 million forecast in November. Still, inventories will be down from 147.1 million a year ago because of drought.

With more wheat on the world market, US exports of the grain will fall to 900 million bushels, down 2.7% from a month earlier, the USDA said. Unsold US wheat supplies on May 31, 2007, would total 438 million bushels, up 4.8% from the November estimate and down from 571 million this year, the department said. Analysts surveyed by Bloomberg expected 432 million, on average.

Wheat prices on the farm are expected to average $4.30 a bushel in the marketing year that began June 1, down from last month’s estimate of $4.35 and up from $3.42 last year, the department said.

Wheat for December delivery fell 10 cents, or 2% to $4.8575 a bushel on December 8. Prices have declined 13% from a 10-year high on October 17 at $5.57. Still, futures are up 43% this year after drought slashed output in Australia, the United States and Brazil. The USDA estimated world corn production in the 2006-2007 season, at 692.9 million metric tonne, up 0.6% from the forecast in November.