FAO Increases World Wheat Production

The United Nations' food body said Thursday it expects world wheat production in 2013-14 to increase 4.3% on the year, to 690 million metric tons, as high prices spark an expansion of area in Europe and yields recover from drought in Russia.

The Food and Agriculture Organization said its first forecast is for the second-largest crop on record after 2011's, with aggregate plantings in the European Union seen up 3% on the year, amid generally favorable weather conditions.

The FAO added that prospects are also satisfactory in Russia, with a decrease in winter plantings expected to be more than offset by an increase in spring area. The country's output is forecast to increase sharply, it said, assuming yields recover from last year's drought-reduced levels.

However, it also noted the outlook in the U.S. is less favorable than other major wheat-producing countries, with good precipitation in February likely arriving too late for drought-affected winter wheat crops to make a full recovery.

As such, the FAO forecasts the country's output will decrease by around 6% on the year, to 58 million tons, despite a slight rise in winter wheat plantings and the likelihood that spring plantings will at least match last year's level.

The FAO increased its forecast for world cereal stocks at the end of 2012-13 by around 4 million tons, mainly due to upward revisions in wheat inventories. At 499 million tons, the new carry-over estimate would still be 2.7% lower than the previous season, it added, due to an anticipated draw-down in wheat and coarse grains, although rice inventories are expected to rise further.

It is still too early for even a preliminary global cereal forecast, the FAO said, as the bulk of coarse grains and paddy crops have yet to be planted. However, it noted prospects for the southern hemisphere's initial crops are generally favorable and rice prospects are also encouraging in several countries below the equator.

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