World wheat supply in decline

Canada will harvest a crop of 24 million tonnes of all wheat in 2010 compared with 26.515 million tonnes last year, the Wheat Board said, which is in line with its previous forecast of Jan. 15.

That would be its smallest harvest in three years, but in line with the 10-year average.

 

Global wheat production is forecast to fall 3.7% to 651 million tonnes in 2010, but the estimate is up 7 million tonnes or 1% from the Wheat Board’s last estimate on Jan. 15.

 

The Wheat Board is one of the world’s biggest grain marketers and has a government-granted monopoly to sell Western Canada’s wheat and malting barley.

 

Not only CWB predicts a smaller world heat crop, also the United Nations Food and Agriculture Organisation (FAO) said this week that world wheat output could fall by 5% in 2010 after two bumper crop years, while the International Grains Council (IGC) last month forecast world wheat production to fall about 3% to 653 million tonnes.

 

Wheat futures at the Chicago Board of Trade have more than halved since its record high of $13 per bushel ($477/t) in February 2008.

 

Insiders say that CWB’s forecast for a smaller crop is no surprise. With no major weather-related threats to current world wheat crops, more farmers are likely to choose the better returns offered by oilseed crops.

 

Barley production in Canada and the world is expected to be lower in 2010 as low prices dampen farmers’ interest, said CWB.

 

Canada’s barley production will edge lower to 9.2 million tonnes from 9.5 million in 2009. Global production will fall to 138 million tonnes from 144 million, CWB said.