Global wheat prices to fall in 2008 but supported: UN

Global wheat prices will probably fall from record levels this year as production expands, but depleted global stocks will lend some strength, a UN grain economist said on Wednesday.
"We expect prices to come down, but all indications point to the fact we won't go back to the low prices we've seen in the past," Abdolreza Abbassian of the UN's Food and Agriculture Organisation told Reuters at a conference in the Sinai resort town of Sharm el-Sheikh. "The tight situation will be slightly improved in 2008/2009."
The price of wheat, the world's most exported grain, has hit record highs due to drought, rising food demand and increased use of grains as environmentally friendly biofuels. Producers such as Russia and Ukraine have restricted exports to battle inflation fuelled by rocketing food prices, helping to further push up prices on the international market.
Abbassian said high prices would boost planting this season, but with global wheat stocks at 30-year lows, more production would not be enough to knock down prices significantly. "Stocks have been depleted so much it will take more than one season to rebuild," he said.
Global wheat production could climb as much as 6-8 percent in 2008 with the total area planted for wheat rising by up to 2 percent, assuming normal weather, Abbassian said. He said the European Union, the United States and Australia, which could boost production by 13 million tonnes this season depending on weather, would lead the global production increase.
"It's still very early, but it's possible Australia could regain its status as an exporter and even have a record harvest," he said. The United States could boost production by 4 million tonnes, Abbassian said. Prices for coarse grains would also fall, helped by a rise in production of between 1 and 2 percent in 2008, he said.
"The record prices we've seen perhaps won't be repeated, but maize prices could increase slightly," Abbassian said. Some US farmers could switch away from planting maize to wheat or soybeans to try to get better prices, he said. The global area planted with coarse grains could decrease, he added.