Grain body cuts wheat output estimate

The International Grain Council has slashed its year to June 2007 wheat output estimate to 585 million tonne, down 33 million tonne from last year and 3 million tonne lower than its previous estimate.

In a report released recently, the council said lower forecast stems primarily from less-than-expected wheat output in Australia, which is reeling under an "exceptionally severe drought".

Australia's wheat output is now estimated to fall over 60 per cent on year. The drop in Australian output has offset the small increases projected for the CIS countries, North America and China, the council said.

It said though Australia's carry-over stocks will cushion the impact of the small crop, its exports are expected to fall to a four-year low of 13.5 million tonne.

Low output will also lead to lower carry-over stocks and thinner exports. The Council said the closing stocks of wheat are likely to dip to a low of 114 million tonne this year from 135 million tonne in the year ended June 2006.

Global carry-over wheat stocks for five major exporters"�Argentina, Australia, Canada, EU and US"�are forecast at 32 million tonne, down 23 million tonne on year, and the lowest since 1995-96.

Supply concerns have already pushed up global grain prices to a nine-year high, the council said.

It said global wheat prices have risen by about $20-$30 this month amid reduced crop forecast in Australia and introduction of export quotas in Ukraine.

Rising global wheat prices over supply concerns, meanwhile, have pushed up India's wheat prices substantially as majority of imported wheat comes from these two countries. The Indian government has already contracted import of 5.5 million tonne wheat, of which about 2 million tonne has arrived.

Private import deals, meanwhile, are pegged at about 0.8-1.0 million tonne, of which only 400,000 tonne has arrived so far.India is importing wheat after a six-year gap to meet its buffer stock requirement.

It has emerged the world's second largest wheat importer, next only to Egypt.