Global Wheat Supplies Will Slide by End of June on Drought, Council Says

World wheat stockpiles will decline by the end of June as drought damages crops in Russia and Kazakhstan, the International Grains Council said, slashing an outlook for higher inventories.

Stocks will drop to 192 million metric tons at the end of the 2010-11 crop year from 197 million tons at last month’s close, the London-based council said in a monthly report today. The group cut its outlook for this year’s wheat harvest.

Russia may harvest 45 million tons of wheat this year, the Russian Grain Union said this week, down from 62 million tons last year. The drought in the country has damaged 10.1 million hectares (25 million acres), or 32 percent of all planted areas, Agriculture Minister Yelena Skrynnik said July 23.

“A prolonged period of dry weather and high temperatures significantly reduced yield prospects in Russia, Kazakhstan, parts of Ukraine and northwestern areas of the EU,” the council said, referring to the European Union.

The group last month had forecast an increase in global wheat stocks to 201 million tons.

The world wheat harvest will be 13 million tons smaller than forecast last month at 651 million tons in 2010-11, the council said. Wheat consumption will amount to 655 million tons, according to the report.

Kazakh Crop

Russia will harvest 50 million tons of wheat in 2010, 7 million tons less than forecast in June, while Kazakhstan’s crop will be 13.5 million tons, a downward adjustment of 3 million tons, according to the council.

The U.S. is forecast to export 26 million tons of wheat in 2010-11, more than a previous forecast of 24.1 million tons and compared with year-earlier exports of 23 million tons, the council said.

“This month’s sharply lower crop expectations in Kazakhstan, Russia and Ukraine are reflected in reduced export forecasts, offset by a major increase in U.S. exports, in particular,” the grains council said.

Russia’s outbound shipments will decline to 15.3 million tons from 18.3 million tons a year earlier, the group estimates. Last month, the grains council had expected Russian wheat exports of 18 million tons.

World corn production probably will be 823 million tons in 2010-11, 1 million tons less than forecast last month though still a record, on bigger crops in the U.S., China and Mexico, the council said. Use of the grain will rise to 830 million tons, unchanged from last month’s estimate, on demand from the bio-ethanol industry in the U.S., it said.

Millions of metric tons

                 2008-09     2009-10      2010-11     2010-11
                                         (June 24)   (July 29)

WHEAT

Production         686         677          664        651
Trade              136         122          120        120
Consumption        640         649          658        655
Stocks             167         195          201        192

CORN

Production         794         806          824        823
Trade               84          85           88         88
Consumption        779         815          830        830
Stocks             152         143          137        134

TOTAL GRAINS

Production       1,797       1,785        1,776      1,753
Trade              248         232          234        223
Consumption      1,723       1,761        1,781      1,774
Stocks             367         391          387        369

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

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