World wheat output is expected to drop 1.5 percent to about 615 million tonnes this year, driven down by falling output in the United States, Russia and Ukraine, the United Nations Food and Agriculture Organisation (FAO) said.
FAO said in a report published on Wednesday that the decline in the major producing countries would offset expected increases in output in Argentina, China, the European Union and North Africa.
Global wheat output would remain above the five-year average, it said.
The International Grains Council (IGC) said in June it expected world wheat production in 2006/2007 (July-June) to come in at 604.6 million tonnes, down from 617.1 million tonnes estimated for 2005/2006.
The FAO expects world cereals production to drop 0.9 percent to 2,020 million tonnes this year, but the total output would remain the third highest on record and above the five-year average.
FAO said the cereals output decline, coupled with increased demand, would trigger a sharp decline in world cereals stocks, seen down 10 percent to 417 million tonnes by the close of seasons ending in 2007.
FAO said increased feed demand for the poultry industry, recovering from a bird flu crisis earlier this year, is expected to power global consumption of grains.
Growing demand for ethanol would boost industrial use of coarse grains, in particular maize, especially in the United States and China, the report said. FAO said it expected world cereals prices to extend gains due to tighter supplies and increased demand.
Despite a generally satisfactory global food outlook, many countries in Africa and Asia were experiencing severe food difficulties and needed external aid.